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What changed in Bank First Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Bank First Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+298 added−295 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in Bank First Corp's 2024 10-K

298 paragraphs added · 295 removed · 235 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

56 edited+12 added−17 removed163 unchanged
Biggest changeThe fourteen counties in which the Bank has offices have an estimated aggregate population of 1,894,606, based on 2020 U.S. Census data, and total deposits of approximately $60.4 billion as of June 30, 2023, according to the most recent data published by the FDIC.
Biggest changeBased on the deposit market share reports published by the FDIC on June 30, 2024, Bank First ranked in the top three of market share in five of the fourteen counties in which its branches are located. The fourteen counties in which the Bank has offices have an estimated aggregate population of 1,894,606, based on 2020 U.S.
Under the Liquidity heading, our priorities are to (i) ensure that liquidity levels are adequate for anticipated needs, and (ii) maintain a relationship-centric customer portfolio. Under the heading of Sensitivity to Market Risk, our priorities include (i) minimizing optionality, and (ii) maintaining rate neutrality.
Under the Liquidity heading, our priorities are (i) ensure that liquidity levels are adequate for anticipated needs, and (ii) to maintain a relationship-centric customer portfolio. Under the heading of Sensitivity to Market Risk, our priorities include (i) minimizing optionality, and (ii) maintaining rate neutrality.
In general, the Bank is subject to a base legal limit on loans to a single borrower equal to 15% of the Bank’s capital and unimpaired surplus, plus an additional 10 percent of the Bank’s capital and surplus, if the amount that exceeds the 15 percent general limit is fully secured by readily marketable collateral.
In general, the Bank is subject to a base legal limit on loans to a single borrower equal to 15 percent of the Bank’s capital and unimpaired surplus, plus an additional 10 percent of the Bank’s capital and surplus, if the amount that exceeds the 15 percent general limit is fully secured by readily marketable collateral.
We make available, free of charge, on or through our website, www.bankfirst.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably practicable after each is electronically filed with, or furnished to, the SEC. 12 Table of Contents Supervision and Regulation We are extensively regulated under federal and state law.
We make available, free of charge, on or through our website, www.bankfirst.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and amendments to such filings, as soon as reasonably practicable after each is electronically filed with, or furnished to, the SEC. 13 Table of Contents Supervision and Regulation We are extensively regulated under federal and state law.
On December 21, 2018, federal banking agencies issued a joint final rule to revise their regulatory capital rules to (i) address the upcoming implementation of the “current expected credit losses” (“CECL”) accounting standard under GAAP; (ii) provide 16 Table of Contents an optional three-year phase-in period for the day-one adverse regulatory capital effects that banking organizations are expected to experience upon adopting CECL; and (iii) require the use of CECL in stress tests beginning with the 2020 capital planning and stress testing cycle for certain banking organizations.
On December 21, 2018, federal banking agencies issued a joint final rule to revise their regulatory capital rules to (i) address the upcoming implementation of the “current expected credit losses” (“CECL”) accounting standard under GAAP; (ii) provide 17 Table of Contents an optional three-year phase-in period for the day-one adverse regulatory capital effects that banking organizations are expected to experience upon adopting CECL; and (iii) require the use of CECL in stress tests beginning with the 2020 capital planning and stress testing cycle for certain banking organizations.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by the Bank, including new rules respecting the terms of credit cards and of debit card overdrafts; 20 Table of Contents ● govern the Bank’s disclosures of credit terms to consumer borrowers; ● require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the community it serves; ● prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which the Bank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
These laws and regulations include, among numerous other things, provisions that: ● limit the interest and other charges collected or contracted for by the Bank, including new rules respecting the terms of credit cards and of debit card overdrafts; ● govern the Bank’s disclosures of credit terms to consumer borrowers; ● require the Bank to provide information to enable the public and public officials to determine whether it is fulfilling its obligation to help meet the housing needs of the community it serves; ● prohibit the Bank from discriminating on the basis of race, creed or other prohibited factors when it makes decisions to extend credit; ● govern the manner in which the Bank may collect consumer debts; and ● prohibit unfair, deceptive or abusive acts or practices in the provision of consumer financial products and services.
For more information regarding Accounting Standards Update No. 2016-13, which introduced CECL as the methodology to replace the current “incurred loss” methodology for financial assets measured at amortized cost, and changed the approaches for recognizing and recording credit losses on available-for-sale debt securities and purchased credit impaired financial assets, including the required implementation date for the Company, see the notes to the Company’s consolidated financial statements for the year ended December 31, 2023.
For more information regarding Accounting Standards Update No. 2016-13, which introduced CECL as the methodology to replace the current “incurred loss” methodology for financial assets measured at amortized cost, and changed the approaches for recognizing and recording credit losses on available-for-sale debt securities and purchased credit impaired financial assets, including the required implementation date for the Company, see the notes to the Company’s consolidated financial statements for the year ended December 31, 2024.
The Guidance is triggered when CRE loan concentrations exceed either: ● Total reported loans for construction, land development, and other land of 100% or more of a bank ’ s total risk-based capital; or ● Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank ’ s total risk-based capital. 19 Table of Contents The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type.
The Guidance is triggered when CRE loan concentrations exceed either: ● Total reported loans for construction, land development, and other land of 100% or more of a bank ’ s total risk-based capital; or ● Total reported loans secured by multifamily and nonfarm nonresidential properties and loans for construction, land development, and other land of 300% or more of a bank ’ s total risk-based capital. 20 Table of Contents The Guidance also applies when a bank has a sharp increase in CRE loans or has significant concentrations of CRE secured by a particular property type.
If we were to enter bankruptcy or become subject to the orderly liquidation process established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. 13 Table of Contents Acquisitions.
If we were to enter bankruptcy or become subject to the orderly liquidation process established by the Dodd-Frank Act, any commitment by us to a federal bank regulatory agency to maintain the capital of the Bank would be assumed by the bankruptcy trustee or the FDIC, as appropriate, and entitled to a priority of payment. 14 Table of Contents Acquisitions.
Our failure to comply with these internal control rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the values of our securities. The assessments of our financial reporting controls as of December 31, 2023 are included in this report under “Item 9A. Controls and Procedures.” Corporate Governance.
Our failure to comply with these internal control rules may materially adversely affect our reputation, ability to obtain the necessary certifications to financial statements, and the values of our securities. The assessments of our financial reporting controls as of December 31, 2024 are included in this report under “Item 9A. Controls and Procedures.” Corporate Governance.
The Dodd-Frank Act (1) grants shareholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for Compensation Committee members; and (3) requires companies listed on national securities exchanges to adopt incentive-based compensation claw-back policies for executive officers. 14 Table of Contents Incentive Compensation.
The Dodd-Frank Act (1) grants shareholders of U.S. publicly traded companies an advisory vote on executive compensation; (2) enhances independence requirements for Compensation Committee members; and (3) requires companies listed on national securities exchanges to adopt incentive-based compensation claw-back policies for executive officers. 15 Table of Contents Incentive Compensation.
The banking agencies issued proposed rules in 2011 and previously issued guidance on sound incentive compensation policies. In 2016, the Federal Reserve and the OCC also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2023, these rules have not been implemented.
The banking agencies issued proposed rules in 2011 and previously issued guidance on sound incentive compensation policies. In 2016, the Federal Reserve and the OCC also proposed rules that would, depending upon the assets of the institution, directly regulate incentive compensation arrangements and would require enhanced oversight and recordkeeping. As of December 31, 2024, these rules have not been implemented.
The required minimum leverage ratio for all banks is 4.0%. 15 Table of Contents In addition, the capital rules require a capital conservation buffer of CET1 of 2.5% above each of the minimum capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
The required minimum leverage ratio for all banks is 4.0%. 16 Table of Contents In addition, the capital rules require a capital conservation buffer of CET1 of 2.5% above each of the minimum risk-based capital ratio requirements (CET1, Tier 1, and total risk-based capital), which is designed to absorb losses during periods of economic stress.
Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth. The Bank was well capitalized at December 31, 2023, and brokered deposits are not restricted.
Failure to be well-capitalized or to meet minimum capital requirements could also result in restrictions on the Bank’s ability to pay dividends or otherwise distribute capital or to receive regulatory approval of applications or other restrictions on its growth. The Bank was well capitalized at December 31, 2024, and brokered deposits are not restricted.
We believe our compensation package and benefits are competitive with others in our industry. For additional information regarding our employee benefit plans, see “Note 17 – Employee Benefit Plans” to our consolidated financial statements included in this report. ​ Bank First currently has approximately 379 FTEs.
We believe our compensation package and benefits are competitive with others in our industry. For additional information regarding our employee benefit plans, see “Note 17 – Employee Benefit Plans” to our consolidated financial statements included in this report. ​ Bank First currently has approximately 366 FTEs.
In 2023, the Company and Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the then-applicable capital conservation buffer. Based on current estimates, we believe that the Company and Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2024.
In 2024, the Company and Bank’s regulatory capital ratios were above the applicable well-capitalized standards and met the then-applicable capital conservation buffer. Based on current estimates, we believe that the Company and Bank will continue to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2025.
As the Company and the Bank each had less than $10 billion in consolidated assets in 2023, they are not subject to the routine supervision of the CFPB, but this may change in the future as the Company and the Bank grow.
As the Company and the Bank each had less than $10 billion in consolidated assets in 2024, they are not subject to the routine supervision of the CFPB, but this may change in the future as the Company and the Bank grow.
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. Anti-Money Laundering .
Under the regulations, if a regulator determines that a bank fails to meet any standards prescribed 19 Table of Contents by the guidelines, the regulator may require the bank to submit an acceptable plan to achieve compliance, consistent with deadlines for the submission and review of such safety and soundness compliance plans. Anti-Money Laundering .
The Department of Justice (“DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
The Department of Justice (“DOJ”), and the federal bank regulatory agencies have issued an Interagency Policy Statement on Discrimination in Lending that provides guidance to financial institutions in determining whether discrimination exists, how 22 Table of Contents the agencies will respond to lending discrimination, and what steps lenders might take to prevent discriminatory lending practices.
Our board of directors has delegated the responsibility of monitoring our investment activities to our ALCO. Day-to-day activities pertaining to the securities portfolio 11 Table of Contents are conducted under the supervision of our CEO and CFO. We actively monitor our investments on an ongoing basis to identify any material changes in the securities.
Our board of directors has delegated the responsibility of monitoring our investment activities to our ALCO. Day-to-day activities pertaining to the securities portfolio are conducted under the supervision of our CEO and CFO. We actively monitor our investments on an ongoing basis to identify any material changes in the securities.
The increasingly competitive environment is the result of changes in regulation, changes in technology and product delivery systems, additional financial service providers, and the accelerating pace of consolidation among financial services providers. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation.
The increasingly competitive environment is the result of changes in regulation, changes in technology and product delivery systems, additional financial service providers, and the accelerating pace of consolidation among financial services providers. 8 Table of Contents The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation.
The Company has adopted and implemented an Information Security Program to comply with the regulatory cybersecurity guidance. Consumer Regulation. Activities of the Bank are subject to a variety of statutes and regulations designed to protect consumers.
The Company has adopted and implemented an Information Security Program to comply with the regulatory cybersecurity guidance. 21 Table of Contents Consumer Regulation. Activities of the Bank are subject to a variety of statutes and regulations designed to protect consumers.
Authority to supervise and examine the Company and the Bank for compliance with federal consumer laws 17 Table of Contents remains largely with the Federal Reserve and the OCC, respectively. However, the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators.
Authority to supervise and examine the Company and the Bank for compliance with federal consumer laws remains largely with the Federal Reserve and the OCC, respectively. However, the CFPB may participate in examinations on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary regulators.
The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set 18 Table of Contents forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
The federal banking agencies have adopted regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement these required standards. These guidelines set forth the safety and soundness standards used to identify and address problems at insured depository institutions before capital becomes impaired.
The competing major commercial banks have greater resources that may provide them a competitive advantage by enabling 7 Table of Contents them to maintain numerous branch offices, mount extensive advertising campaigns and invest in new technologies.
The competing major commercial banks have greater resources that may provide them a competitive advantage by enabling them to maintain numerous branch offices, mount extensive advertising campaigns and invest in new technologies.
Our investment portfolio is comprised primarily of U.S. government securities, mortgage-backed securities backed by government-sponsored entities, and taxable and tax-exempt municipal securities. Our investment policy is reviewed annually by our board of directors. Overall investment goals are established by our board, CEO, and members of our Asset Liability Management Committee (“ALCO”).
Our investment portfolio is comprised primarily of U.S. government securities, mortgage-backed securities backed by government-sponsored entities, corporate notes, and taxable and tax-exempt municipal securities. 12 Table of Contents Our investment policy is reviewed annually by our board of directors. Overall investment goals are established by our board, CEO, and members of our Asset Liability Management Committee (“ALCO”).
The CFPB also may participate in examinations of our other direct or indirect subsidiaries that offer consumer financial products or services.
The CFPB also may participate in examinations of our other direct or indirect subsidiaries that offer consumer financial products 18 Table of Contents or services.
Our customers are generally individuals, small to medium-sized businesses and professional firms that are located in or conduct a substantial portion of their business in our market areas. At December 31, 2023, we had total loans receivable of $3.34 billion, representing approximately 79.3% of our total assets.
Our customers are generally individuals, small to medium-sized businesses and professional firms that are located in or conduct a substantial portion of their business in our market areas. At December 31, 2024, we had total loans receivable of $3.52 billion, representing approximately 78.3% of our total assets.
We also review our securities for potential credit deterioration at least quarterly. Human Capital Resources ​ Our Company culture emphasizes our longstanding dedication to being respectful to others and having a workforce that is representative of the communities we serve. Diversity, equity and inclusion (“DEI”) are fundamental to our culture.
We also review our securities for potential credit deterioration at least quarterly. Human Capital Resources ​ Our Company culture emphasizes our longstanding dedication to being respectful to others and having a workforce that is representative of the communities we serve.
As of December 31, 2023, we had 26 nonaccrual loans totaling approximately $5.7 million, or 0.2% of total loans. For additional discussion related to nonperforming loans, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section as well as the notes to the consolidated financial statements. Loan Approval Certain credit risks are inherent in making loans.
As of December 31, 2024, we had 32 nonaccrual loans totaling approximately $6.8 million, or 0.2% of total loans. For additional discussion related to nonperforming loans, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section as well as the notes to the consolidated financial statements. Loan Approval Certain credit risks are inherent in making loans.
It is also intended to safeguard the Bank’s depositors by diversifying the risk of credit losses among a relatively large number of creditworthy borrowers engaged in various types of businesses. Based upon the capitalization of the Bank at December 31, 2023, the Bank’s base legal lending limit was $66.9 million and the Bank’s internal lending limit was $53.6 million.
It is also intended to safeguard the Bank’s depositors by diversifying the risk of credit losses among a relatively large number of creditworthy borrowers engaged in various types of businesses. Based upon the capitalization of the Bank at December 31, 2024, the Bank’s base legal lending limit was $65.6 million and the Bank’s internal lending limit was $52.5 million.
As of December 31, 2023, consumer loans made up approximately $51.0 million or 1.5% of our loan portfolio. Mortgage Banking Activities Our mortgage banking operations include correspondent or secondary market lending, and in-house mortgage lending (included in residential mortgage and home equity loan totals above). We conduct secondary market lending through Fannie Mae, Federal Home Loan Bank of Chicago, U.S.
As of December 31, 2024, consumer loans made up approximately $55.4 million or 1.6% of our loan portfolio. Mortgage Banking Activities Our mortgage banking operations include correspondent or secondary market lending, and in-house mortgage lending (included in residential mortgage and home equity loan totals above). We conduct secondary market lending through Fannie Mae, Federal Home Loan Bank of Chicago, U.S.
We obtain a security interest in real estate whenever possible, in addition to any other available collateral, in order to increase the likelihood of the ultimate repayment of the loan. As of December 31, 2023, loans secured by real estate made up approximately $2.59 billion, or 77.4%, of our loan portfolio.
We obtain a security interest in real estate whenever possible, in addition to any other available collateral, in order to increase the likelihood of the ultimate repayment of the loan. As of December 31, 2024, loans secured by real estate made up approximately $2.67 billion, or 75.8%, of our loan portfolio.
We believe employees to be our greatest asset and that our future success depends on our ability to attract, retain and develop employees. Professional development is a key priority, which is facilitated through our many corporate development initiatives including extensive training programs, corporate mentoring, leadership programs, and educational reimbursement.
We believe employees to be our greatest asset and that our future success depends on our ability to attract, retain and develop a qualified workforce representative of the customers and communities we serve. Professional development is a key priority, which is facilitated through our many corporate development initiatives including extensive training programs, corporate mentoring, leadership programs, and educational reimbursement.
Our installment loans typically amortize over periods up to seven years. Although we typically require monthly principal and interest payments on our loan products, we will offer consumer loans at interest only with a single maturity date when a specific source of repayment is available.
Although we typically require monthly principal and interest payments on our loan products, we will offer consumer loans at interest only with a single maturity date when a specific source of repayment is available.
It is a wholly-owned subsidiary of the Bank, and its purpose is to hold the Bank’s 5.88% ownership interest in Generations Title, LLC, a Wisconsin title company. As of December 31, 2023, we had total consolidated assets of $4.22 billion, total loans of $3.34 billion, total deposits of $3.43 billion and total stockholders’ equity of $619.8 million.
It is a wholly-owned subsidiary of the Bank, and its purpose is to hold the Bank’s 5.88% ownership interest in Generations Title, LLC, a Wisconsin title company. As of December 31, 2024, we had total consolidated assets of $4.50 billion, total loans of $3.52 billion, total deposits of $3.66 billion and total stockholders’ equity of $639.7 million.
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. As of December 31, 2023, no such regulations have been proposed. Economic Sanctions .
FinCEN is required to implement regulations to specify how covered financial institutions, such as the Company, should incorporate these national priorities into their AML programs. Economic Sanctions .
As of December 31, 2023, commercial and industrial loans made up approximately $487.9 million or 14.6% of our loan portfolio. We provide a mix of variable and fixed rate commercial and industrial loans.
As of December 31, 2024, commercial and industrial loans made up approximately $500.4 million or 14.2% of our loan portfolio. We provide a mix of variable and fixed rate commercial and industrial loans.
On November 18, 2021, the federal banking agencies issued a new rule effective in 2022 that requires banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” On July 26, 2023 the SEC adopted rules requiring registrants such as the Bank to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy and governance.
The federal banking agencies additionally require banks to notify their regulators within 36 hours of a “computer-security incident” that rises to the level of a “notification incident.” The SEC has also adopted rules requiring registrants such as the Bank to disclose material cybersecurity incidents they experience and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy and governance.
None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
One-third (33%) of our Board members and 42% of our Senior Management team identify as female. None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.
We do not make any loans to any director, executive officer 8 Table of Contents of the Bank, or the related interests of each, unless the loan is approved by the full board of directors of the Bank and is on terms not more favorable than would be available to a person not affiliated with the Bank.
We do not make any loans to any director, executive officer of the Bank, or the related interests of each, unless the loan is approved by the full board of directors of the Bank and is on terms not more favorable than would be available to a person not affiliated with the Bank. 9 Table of Contents Credit Administration and Loan Review Our loan review consists of both commercial and retail review where loan files are reviewed and risk ratings are validated.
As of December 31, 2023, residential mortgage loans and home equity loans made up approximately $888.6 million or 26.6% of our loan portfolio. ​ Commercial and Industrial Loans We have significant expertise in small to middle market commercial and industrial lending.
We generally limit the extension of credit to 90% of the available equity of each property. As of December 31, 2024, residential mortgage loans and home equity loans made up approximately $913.2 million or 26.0% of our loan portfolio. ​ Commercial and Industrial Loans We have significant expertise in small to middle market commercial and industrial lending.
Market Area Bank First is a full-service community bank, offering business and retail products and services in communities throughout Wisconsin. Our branches are located in Brown, Jefferson, Manitowoc, Monroe, Outagamie, Ozaukee, Shawano, Sheboygan, Waupaca, and Winnebago counties. With the closing of the merger with Hometown on February 10, 2023, we also entered Columbia, Dane, Fond du Lac, and Waushara counties.
Market Area Bank First is a full-service community bank, offering business and retail products and services in communities throughout Wisconsin. Our branches are located in Brown, Columbia, Dane, Fond du Lac, Jefferson, Manitowoc, Monroe, Outagamie, Ozaukee, Shawano, Sheboygan, Waupaca, and Winnebago counties. Our main office is located at 402 N. 8th Street, Manitowoc, Wisconsin.
We have also added a sixth category to prioritize our strategic goals surrounding Information Technology. Under the heading of Capital, our priorities include (i) growing capital through strong earnings, and (ii) assessing and monitoring short and long-term capital goals. Under the heading of Asset Quality, our top priority is maintaining a strong credit culture.
Under the heading of Capital, our priorities include (i) growing capital through strong earnings, (ii) assessing and monitoring short and long term capital goals, and (iii) deploying capital in the best interest of our shareholders. Under the heading of Asset Quality, our top priority is maintaining a strong credit culture.
Our policy for reviewing commercial credit files consisted of selecting a percentage of specific files on an annual basis as defined in our loan review plan, and reviewing them for risk rating and policy compliance. Our goal is to review every commercial relationship of $500,000 or more at least once in a five-year period.
Our goal is to review every commercial relationship of $750,000 or more at least once in a five-year period. Our retail review consists of selecting a percentage of specific files on an annual basis, and reviewing them for policy compliance. Results of completed loan reviews are disclosed in writing, along with management responses, to the Loan Committee.
Because our loan portfolio contains a number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in our levels of nonperforming assets. 9 Table of Contents As of December 31, 2023, commercial real estate loans made up approximately $1.70 billion or 50.8% of our loan portfolio. ● Residential Mortgage Loans and Home Equity Loans.
Because our loan portfolio contains a number of commercial real estate loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in our levels of nonperforming assets.
Consumer Loans We make a variety of loans to individuals for personal and household purposes, including secured and unsecured installment loans and revolving lines of credit. Consumer loans are underwritten based on the borrower’s income, current debt level, past credit history, and the availability and value of collateral. Consumer rates are both fixed and variable, with negotiable terms.
Consumer loans are underwritten based on the borrower’s income, current debt level, past credit history, and the availability and value of collateral. Consumer rates are both fixed and variable, with negotiable terms. Our installment loans typically amortize over periods up to seven years.
We also offer a variety of lot loan options to consumers to purchase the lot on which they intend build their home. We also offer traditional home equity loans and lines of credit. Our underwriting criteria for, and the risks associated with, home equity loans and lines of credit are generally the same as those for first mortgage loans.
We also offer traditional home equity loans and lines of credit. Our underwriting criteria for, and the risks associated with, home equity loans and lines of credit are generally the same as those for first mortgage loans. Home equity loans typically have terms of 20 years or less.
We originate and hold short-term and long-term first mortgages and traditional second mortgage residential real estate loans. Generally, we limit the loan-to-value ratio on our residential real estate loans to 90%. We offer fixed and adjustable rate residential real estate loans with terms of up to 30 years.
Generally, we limit the loan-to-value ratio on our residential real estate loans to 90%. We offer fixed and adjustable rate residential real estate loans with terms of up to 30 years. We also offer a variety of lot loan options to consumers to purchase the lot on which they intend build their home.
Under the heading of Management, our priorities are (i) to review and reassess our organizational structure, and (ii) to sustain and build upon employee engagement. Under the Earnings heading, our priorities include (i) growing and strengthening relationships, (ii) exploring and evaluating current and alternative revenue sources, and (iii) evaluating and pursuing prudent acquisitions.
Under the heading of Management, our priorities are (i) to evaluate our talent to ensure alignment with core competencies, (ii) sustain and build upon employee engagement, and (iii) to maintain a robust vendor management program. Under the heading of Earnings, our priorities include (i) growing and strengthening relationships, and (ii) evaluating and pursuing prudent acquisitions and de novo growth.
Competition The banking business is highly competitive, and we face competition in our market areas from many other local, regional, and national financial institutions.
Census data, and total deposits of approximately $62.5 billion as of June 30, 2024, according to the most recent data published by the FDIC. Competition The banking business is highly competitive, and we face competition in our market areas from many other local, regional, and national financial institutions.
Bank First is focused on building a culture which encourages, supports and celebrates diversity and inclusion for our employees, customers and communities. This collaboration fuels a stronger foundation for innovation and connects us to our communities. Our strategic priorities are organized around the CAMELS ratings, including Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk.
This collaboration fuels a stronger foundation for innovation and connects us to our communities. 7 Table of Contents Our strategic priorities are organized around the CAMELS ratings, including Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk. We have also added a sixth category to prioritize our strategic goals surrounding Information Technology.
The Bank employed approximately 379 full-time equivalent employees (“FTE”), and had an average assets-to-FTE ratio of approximately $10.7 million for the year ended December 31, 2023. For more information, see the Bank’s website at www.bankfirst.com. Recent acquisition Hometown Bancorp, Ltd. On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd.
The Bank employed approximately 366 full-time equivalent employees (“FTE”), and had an average assets-to-FTE ratio of approximately $11.5 million for the year ended December 31, 2024. For more information, see the Bank’s website at www.bankfirst.com. Strategic Plan The Bank is a relationship-based community bank focused on providing innovative solutions that are value driven to the communities we serve.
Credit Administration and Loan Review Our loan review consists of both commercial and retail review where loan files are reviewed and risk ratings are validated. Both are fully outsourced to a firm that specializes in file review and risk rating.
Both are fully outsourced to a firm that specializes in file review and risk rating. Our policy for reviewing commercial credit files consisted of selecting a percentage of specific files on an annual basis as defined in our loan review plan, and reviewing them for risk rating and policy compliance.
Generally, we do not have interest reserves built into loan commitments but require periodic cash payments for interest 10 Table of Contents from the borrower’s cash flow. As of December 31, 2023, construction and development loans made up approximately $200.8 million or 6.0% of our loan portfolio.
Generally, we do not have interest reserves built into loan commitments but require periodic cash payments for interest from the borrower’s cash flow.
We believe in attracting, retaining and promoting quality talent and recognize that diversity makes us stronger as a Company. Our talent acquisition teams partner with hiring managers in sourcing and presenting a diverse slate of qualified candidates to strengthen our organization.
Our talent acquisition teams partner with hiring managers in sourcing and presenting a diverse slate of qualified candidates to strengthen our organization. All of our employees are chosen on the basis of their qualifications and merit.
Removed
("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 Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, Hometown's wholly-owned banking subsidiary, merged with and into the Bank.
Added
Bank First is focused on building a culture which encourages, supports and celebrates diversity and inclusion for our employees, customers and communities.
Removed
Hometown's principal activity was the ownership and operation of Hometown Bank, a state-chartered banking institution that operated ten (10) branches in Wisconsin at the time of closing. The merger consideration totaled approximately $130.5 million.
Added
In addition, competition from nontraditional banking institutions, often known as fintech and non-bank lenders, continues to increase and accelerate, with consumers and businesses having the opportunity to select from a growing variety of traditional and nontraditional alternatives. The ability of such non-banking financial institutions to provide services previously limited to commercial banks has intensified competition.
Removed
Pursuant to the terms of the merger agreement, Hometown shareholders could elect to receive either 0.3962 of a share of the Company'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.
Added
Because non-banking financial institutions are not subject to many of the same regulatory restrictions as banks and bank holding companies, they can often operate with greater flexibility and lower cost structures. These competitors have been successful in developing products that are in direct competition with or are alternatives to the banking services offered by traditional banking institutions.
Removed
Company 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. The Company accounts for these transactions under the acquisition method of accounting, and thus, the financial position and results of operations of acquired institutions prior to the consummation date are not included in the accompanying consolidated financial statements.
Added
Lending Limits Our lending activities are subject to a variety of lending limits imposed by federal law.
Removed
The acquisition method of accounting requires assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determines the fair value of core 6 Table of Contents 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.
Added
As of December 31, 2024, commercial real estate loans made up approximately $1.75 billion or 49.9% of our loan portfolio. 10 Table of Contents ● Residential Mortgage Loans and Home Equity Loans. We originate and hold short-term and long-term first mortgages and traditional second mortgage residential real estate loans.
Removed
The estimated fair values are subject to refinement for up to one year after deal consummation as additional information becomes available relative to the closing date fair values. Strategic Plan The Bank is a relationship-based community bank focused on providing innovative solutions that are value driven to the communities we serve.
Added
As of December 31, 2024, construction and development loans made up approximately $278.0 million or 7.9% of our loan portfolio. 11 Table of Contents Consumer Loans We make a variety of loans to individuals for personal and household purposes, including secured and unsecured installment loans and revolving lines of credit.
Removed
Our main office is located at 402 N. 8th Street, Manitowoc, Wisconsin. Based on the deposit market share reports published by the FDIC on June 30, 2023, Bank First ranked in the top three of market share in six of the fourteen counties in which its branches are located.
Added
Embracing inclusivity and a sense of belonging is at the core of our values, recognizing that diverse perspectives, backgrounds, and experiences strengthen our ability to meet the needs of our associates, communities, clients and shareholders. We believe in attracting, retaining and promoting quality talent and recognize that diversity makes us stronger as a Company.
Removed
Our retail review consists of selecting a percentage of specific files on an annual basis, and reviewing them for policy compliance. Results of completed loan reviews are disclosed in writing, along with management responses, to the Directors Loan Committee. Lending Limits Our lending activities are subject to a variety of lending limits imposed by federal law.
Added
As of December 31, 2024, approximately 73% of our employees self-identified as female and approximately 7% self-identified as people of color. Our talent acquisition, development, and retention focus was on rewarding merit and achievement while nurturing and progressing skilled talent across various segments of the Bank.
Removed
Home equity loans typically have terms of 20 years or less. We generally limit the extension of credit to 90% of the available equity of each property.
Added
On October 24, 2023, the Office of the Comptroller of the Currency (“OCC”), Federal Reserve, and FDIC issued a final rule to modernize their respective CRA regulations. The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026, and revised data reporting requirements taking effect January 1, 2027.
Removed
As of December 31, 2023, approximately 73% of our employees self-identified as female and approximately 5% self-identified as people of color. Twenty-seven percent (27%) of our Board members and 46% of our Senior Management team identify as female. One of our strategic goals is to increase the diversity of our Board in the coming year.
Added
Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities. The final rules were challenged in federal court and a preliminary injunction was granted in March 2024 enjoining implementation of the rules.
Removed
Prior approval by the OCC is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank’s profits for that year combined with its retained net profits for the preceding two calendar years.
Added
The effective dates will be extended for each day the injunction remains in place, pending the resolution of the lawsuit. If the final rules are reinstated, they are likely to make it more challenging and/or costly for the Bank to receive a rating of at least “satisfactory” on its CRA exam. Privacy and Data Security.
Removed
On May 5, 2022, the OCC, FRB, and FDIC issued a notice of proposed rulemaking to provide for a coordinated approach to modernize their respective CRA regulations, such that all banks will be subject to the same set of CRA rules.
Added
The DOJ has increased its efforts to prosecute what it regards as violations of the ECOA and FHA. ​

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

50 edited+14 added−10 removed174 unchanged
Biggest changeIf we or the Bank fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations, as well as our ability to maintain compliance with regulatory capital requirements, would be materially and adversely affected. ​ 31 Table of Contents The costs and effects of litigation, investigations or similar matters involving us or other financial institutions or counterparties, or related adverse facts and developments, could materially affect our business, operating results and financial condition.
Biggest changeFurther, such additional capital could result in dilution to our existing shareholders. If we or the Bank fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations, as well as our ability to maintain compliance with regulatory capital requirements, would be materially and adversely affected.
In addition, our acquisition activities could be material to our business and involve a number of significant risks, including the following: incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operating of our existing business; using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target company or the assets and liabilities that we seek to acquire; exposure to potential asset quality issues of the target company; intense competition from other banking organizations and other potential acquirers, many of which have substantially greater resources than we do; potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including, without limitation, liabilities for regulatory and compliance issues; inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and other projected benefits of the acquisition; incurring time and expense required to integrate the operations and personnel of the combined businesses; inconsistencies in standards, procedures, and policies that would adversely affect our ability to maintain relationships with customers and employees; 27 Table of Contents experiencing higher operating expenses relative to operating income from the new operations; creating an adverse short-term effect on our results of operations; losing key employees and customers; significant problems related to the conversion of the financial and customer data of the entity; integration of acquired customers into our financial and customer product systems; potential changes in banking or tax laws or regulations that may affect the target company; or risks of impairment to goodwill or litigation risk.
In addition, our acquisition activities could be material to our business and involve a number of significant risks, including the following: incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, resulting in our attention being diverted from the operating of our existing business; using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target company or the assets and liabilities that we seek to acquire; exposure to potential asset quality issues of the target company; intense competition from other banking organizations and other potential acquirers, many of which have substantially greater resources than we do; potential exposure to unknown or contingent liabilities of banks and businesses we acquire, including, without limitation, liabilities for regulatory and compliance issues; inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and other projected benefits of the acquisition; incurring time and expense required to integrate the operations and personnel of the combined businesses; inconsistencies in standards, procedures, and policies that would adversely affect our ability to maintain relationships with customers and employees; experiencing higher operating expenses relative to operating income from the new operations; creating an adverse short-term effect on our results of operations; losing key employees and customers; significant problems related to the conversion of the financial and customer data of the entity; integration of acquired customers into our financial and customer product 28 Table of Contents systems; potential changes in banking or tax laws or regulations that may affect the target company; or risks of impairment to goodwill or litigation risk.
We cannot guarantee that the Company or the Bank will be permitted by financial condition or applicable regulatory restrictions to pay dividends, that the board of directors of the Bank will elect to pay dividends to us, nor can we guarantee the timing or amount of any dividend actually paid. ​ Our securities are not FDIC insured. ​ Securities that we issue, including our common stock, are not savings or deposit accounts or other obligations of any bank, insured by the FDIC, any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of our shareholders’ investments. 36 Table of Contents ​ ​ ​ ITEM 1B.
We cannot guarantee that the Company or the Bank will be permitted by financial condition or applicable regulatory restrictions to pay dividends, that the board of directors of the Bank will elect to pay dividends to us, nor can we guarantee the timing or amount of any dividend actually paid. ​ Our securities are not FDIC insured. ​ Securities that we issue, including our common stock, are not savings or deposit accounts or other obligations of any bank, insured by the FDIC, any other governmental agency or instrumentality, or any private insurer, and are subject to investment risk, including the possible loss of our shareholders’ investments. ​ 37 Table of Contents ITEM 1B.
A deterioration in economic conditions in the global and financial markets as well as our primary market areas caused by inflation, recession, pandemics, outbreaks of hostilities or other international or domestic occurrences, unemployment, plant or business closings or downsizing, changes in securities markets or other factors could result in the following consequences, any of which could materially and adversely affect our business: increased loan delinquencies; problem assets and foreclosures; significant write-downs of asset values; lower demand for our products and services; reduced low cost or noninterest-bearing deposits; intangible asset impairment; and collateral for loans made by us, especially real estate, may decline in value, in turn reducing our customers’ ability to repay outstanding loans, and reducing the value of assets and collateral associated with our existing loans.
A deterioration in economic conditions in the global and financial markets as well as our primary market areas caused by inflation, recession, pandemics, outbreaks of hostilities or other international or domestic occurrences, unemployment, trade policies and tariffs, plant or business closings or downsizing, changes in securities markets or other factors could result in the following consequences, any of which could materially and adversely affect our business: increased loan delinquencies; problem assets and foreclosures; significant write-downs of asset values; lower demand for our products and services; reduced low cost or noninterest-bearing deposits; intangible asset impairment; and collateral for loans made by us, especially real estate, may decline in value, in turn reducing our customers’ ability to repay outstanding loans, and reducing the value of assets and collateral associated with our existing loans.
Although we are actively working to manage our CRE concentration and believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are currently sufficient to address the CRE Concentration Guidance, the OCC or other federal regulators could become 33 Table of Contents concerned about our CRE loan concentrations, and they could limit our ability to grow by, among other things, restricting their approvals for the establishment or acquisition of branches, or approvals of mergers or other acquisition opportunities.
Although we are actively working to manage our CRE concentration and believe that our underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are currently sufficient to address the CRE Concentration Guidance, the OCC or other federal regulators could become concerned about our CRE loan concentrations, and they could limit our ability to grow by, among other things, restricting their approvals for the establishment or acquisition of branches, or approvals of mergers or other acquisition opportunities.
If our policies, procedures and systems are deemed deficient or the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, we would be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition 35 Table of Contents plans, which would negatively impact our business, financial condition and results of operations.
If our policies, procedures and systems are deemed deficient or the policies, procedures and systems of the financial institutions that we have already acquired or may acquire in the future are deficient, we would be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans, which would negatively impact our business, financial condition and results of operations.
Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, issues at a third-party vendor of a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance of services, could adversely affect our ability to deliver products and services to our clients and otherwise conduct our business.
Any problems caused by these third parties, including those resulting from disruptions in communication services provided by a vendor, issues at a third-party vendor of a vendor, failure of a vendor to handle current or higher volumes, cyber-attacks and security breaches at a vendor, failure of a vendor to provide services for any reason, or poor performance of services, could adversely affect our ability to deliver products and 32 Table of Contents services to our clients and otherwise conduct our business.
Any damage or failure that causes breakdowns or disruptions in our client relationship management, general ledger, deposit, loan and other systems could damage our reputation, result in a loss of client business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on us.
Any damage or failure that causes breakdowns or disruptions in our client relationship management, general ledger, deposit, loan and other systems could 30 Table of Contents damage our reputation, result in a loss of client business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on us.
Fraud schemes are broad and can include debit card/credit card fraud, check fraud, NSF fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information, impersonation of our clients through the use of falsified or stolen credentials, employee fraud, information fraud, and other malfeasance.
Fraud schemes are broad 31 Table of Contents and can include debit card/credit card fraud, check fraud, NSF fraud, mechanical devices attached to ATM machines, social engineering and phishing attacks to obtain personal information, impersonation of our clients through the use of falsified or stolen credentials, employee fraud, information fraud, and other malfeasance.
Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations, could 28 Table of Contents result in significant costs to remediate or replace the defective components, and could impact our ability to compete.
Failure to properly utilize system enhancements that are implemented in the future could result in impairment charges that adversely impact our financial condition and results of operations, could result in significant costs to remediate or replace the defective components, and could impact our ability to compete.
Additionally, inflation may lead to a decrease in consumer and clients’ purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, increased default rates leading to credit losses which could decrease our appetite for new credit extensions.
Additionally, inflation may lead to a decrease in consumer and clients’ purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, increased default rates leading to credit losses which could decrease our appetite for new credit 24 Table of Contents extensions.
Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain business opportunities or otherwise negatively impact our operations. We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties.
Any future additional assessments, increases or required prepayments in FDIC insurance premiums could reduce our profitability, may limit our ability to pursue certain business opportunities or otherwise negatively impact our operations. 36 Table of Contents We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties.
We have established processes and procedures intended to identify, measure, 30 Table of Contents monitor, report, and analyze the types of risk to which we are subject, including strategic, market, credit, liquidity, capital, cybersecurity, operational, regulatory compliance, litigation, and reputational.
We have established processes and procedures intended to identify, measure, monitor, report, and analyze the types of risk to which we are subject, including strategic, market, credit, liquidity, capital, cybersecurity, operational, regulatory compliance, litigation, and reputational.
Although we believe we have robust information security procedures and controls, our technologies, systems, networks, and our clients’ devices may become the target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our clients’ confidential, proprietary and other information, or otherwise disrupt our or our clients’ business operations.
Although we believe we have appropriate information security procedures and controls in place, our technologies, systems, networks, and our clients’ devices may become the target of cyberattacks that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our clients’ confidential, proprietary and other information, or otherwise disrupt our or our clients’ business operations.
Increases in funding, deposit insurance or other costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations.
Increases in funding, deposit insurance or other 34 Table of Contents costs as a result of these types of events have and could in the future materially adversely affect our financial condition and results of operations.
If the Bank fails to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. We may also be required to satisfy additional capital adequacy standards as determined by the Federal Reserve.
If the Bank fails to meet these minimum capital guidelines and other regulatory requirements, our financial condition would be materially and adversely affected. We may also be required to satisfy additional capital 35 Table of Contents adequacy standards as determined by the Federal Reserve.
In addition, we may incur significant training, licensing, maintenance, consulting, and amortization expense during and after implementation, and any such costs may continue for an extended period of time.
In addition, we may incur significant training, licensing, maintenance, consulting, and amortization expense during and after implementation, and any such costs may 29 Table of Contents continue for an extended period of time.
Sanctions imposed by the United States and other countries in response to such conflict could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Changes in interest rates may have an adverse effect on our net interest income.
Sanctions or tariffs imposed by the United States and other countries in response to such conflict could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. 23 Table of Contents Changes in interest rates may have an adverse effect on our net interest income.
Most recently there has been an increase in class action lawsuits filed claiming deceptive practices or violations of account terms in connection with non-sufficient fees or overdraft charges. We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means.
Most recently there has been an increase in class action lawsuits filed claiming deceptive practices or violations of account terms in connection with non-sufficient fees or overdraft charges and violations of the Fair Labor Standards Act (FLSA). We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means.
In particular, a substantial majority of our liabilities in 2023 were checking accounts and other liquid deposits, which are payable on demand or upon several days' notice, while by comparison, a substantial majority of our assets were loans, which cannot be called 24 Table of Contents or sold in the same time frame.
In particular, a substantial majority of our liabilities in 2024 were checking accounts and other liquid deposits, which are payable on demand or upon several days' notice, while by comparison, a substantial majority of our assets were loans, which cannot be called or sold in the same time frame.
Furthermore, our strategic initiatives may result in an increase in expense, divert management attention, take away from other opportunities that may have proved more successful, negatively impact operational effectiveness or impact 26 Table of Contents employee morale.
Furthermore, our strategic initiatives may result in an increase in expense, divert management attention, take away from other opportunities that may have proved more successful, negatively impact operational effectiveness or impact employee morale.
As of December 31, 2023, approximately 77.4% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. This includes collateral consisting of income producing and residential construction properties, which properties tend to be more sensitive to general economic conditions and downturns in real estate markets.
As of December 31, 2024, approximately 75.8% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. This includes collateral consisting of income producing and residential construction properties, which properties tend to be more sensitive to general economic conditions and downturns in real estate markets.
While we are not aware of any successful hacking or cyberattacks into our computer or other information technology systems, there can be no assurance that we will not be the victim of successful hacking or cyberattacks in the future that could cause us to suffer material losses.
While we are not aware of any material cybersecurity incidents on our computer or other information technology systems, there can be no assurance that we will not be the victim of successful cyberattacks in the future that could cause us to suffer material losses.
Commercial real estate (“CRE”) is cyclical and poses risks of loss to us due to our concentration levels and risk of the asset, especially during a difficult economy, including the current stressed economy. As of December 31, 2023, 50.8% of our loan portfolio was comprised of loans secured by commercial real estate.
Commercial real estate (“CRE”) is cyclical and poses risks of loss to us due to our concentration levels and risk of the asset, especially during a difficult economy, including the current stressed economy. As of December 31, 2024, 49.9% of our loan portfolio was comprised of loans secured by commercial real estate.
Our future success may depend, in part, on our ability to use technology competitively to offer products and services that provide convenience to customers and create additional efficiencies in our operations.
Our future success may depend, in part, on our ability to use technology competitively to offer products and services 26 Table of Contents that provide convenience to customers and create additional efficiencies in our operations.
While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.
While the Company has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. See “Business - Supervision and Regulation”.
See “Business - Supervision and Regulation”. ​ 32 Table of Contents Federal regulatory agencies, including the Federal Reserve and the OCC, periodically conduct examinations of our business, including for compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations may adversely affect our business.
Federal regulatory agencies, including the Federal Reserve and the OCC, periodically conduct examinations of our business, including for compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations may adversely affect our business.
The occurrence of any cyberattack or information security breach could result in potential liability to clients, reputational damage, 29 Table of Contents disclosure obligations, the disruption of our operations, and regulatory concerns, all of which could adversely affect our business, financial condition or results of operations.
The occurrence of any cyberattack could result in potential liability to clients, reputational damage, disclosure obligations, the disruption of our operations, and regulatory concerns, all of which could adversely affect our business, financial condition or results of operations.
As of December 31, 2023, the fair value of our available for sale securities portfolio was approximately $142.2 million. Factors beyond our control can significantly influence the fair value of our securities and can cause adverse changes to the fair value of these securities.
As of December 31, 2024, the fair value of our available for sale securities portfolio was approximately $223.1 million. Factors beyond our control can significantly influence the fair value of our securities and can cause adverse changes to the fair value of these securities.
In addition, regulatory scrutiny of the industry has increased and could continue to increase, leading to increased regulation of the industry that could lead to a higher cost of compliance, limit our ability to pursue business opportunities and increase our exposure to litigation or fines. Additionally, we conduct our banking operations primarily in Wisconsin.
In addition, regulatory scrutiny of the industry has increased and could continue to increase, leading to increased regulation of the industry that could lead to a higher cost of compliance, limit our ability to pursue business opportunities and increase our exposure to litigation or fines.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. ESG risks could adversely affect our reputation and shareholder, employee, client and third-party relationships and may negatively affect our stock price . 34 Table of Contents Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. ESG, anti-ESG, DEI, and anti-DEI risks could adversely affect our reputation and shareholder, employee, client and third-party relationships and may negatively affect our stock price . Our business faces increasing public scrutiny related to ESG and DEI activities.
Increased competition in our markets may result in reduced loans 25 Table of Contents and deposits, as well as reduced net interest margin and profitability.
Increased competition in our markets may result in reduced loans and deposits, as well as reduced net interest margin and profitability.
Our provision and allowance for credit losses may not be adequate to cover actual credit losses. We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses.
We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses.
Moreover, our clients could withdraw their deposits in favor of alternative investments. While we have historically been able to replace maturing deposits and advances as necessary, we may not be able to replace such funds in the future, especially if a large number of our depositors seek to withdraw their accounts, regardless of the reason.
While we have historically been able to replace maturing deposits and advances as necessary, we may not be able to replace such funds in the future, especially if a large number of our depositors seek to withdraw their accounts, regardless of the reason. 25 Table of Contents Our provision and allowance for credit losses may not be adequate to cover actual credit losses.
As of December 31, 2023, approximately 95.74% of our loans and approximately 97.81% of our deposits were made to borrowers or received from depositors who live and/or primarily conduct business in Wisconsin. Therefore, our success will depend in large part upon the general economic conditions in this area, which we cannot predict with certainty.
Additionally, all of our operating locations are within the state of Wisconsin, and a significant majority of our loans and deposits are made to borrowers or received from depositors who live and/or primarily conduct business in Wisconsin. Therefore, our success will depend in large part upon the general economic conditions in this area, which we cannot predict with certainty.
Banking regulations are primarily intended to protect depositors’ funds and the safety and soundness of the banking system as a whole, and not shareholders. These regulations affect the Bank’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes.
These regulations affect the Bank’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes.
Both the Company and the Bank are subject to various regulatory restrictions relating to the payment of dividends. In addition, the Federal Reserve has the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business.
In addition, the Federal Reserve has the authority to prohibit bank holding companies from engaging in unsafe or unsound practices in conducting their business.
We may be involved from time to time in a variety of litigation, investigations, inquiries, or similar matters arising out of our business. Furthermore, litigation against banks tend to increase during economic downturns and periods of credit deterioration, which may occur or worsen as a result of current economic uncertainty.
Furthermore, litigation against banks tend to increase during economic downturns and periods of credit deterioration, which may occur or worsen as a result of current economic uncertainty.
We depend on our executive officers and other key individuals to continue the implementation of our long-term business strategy and could be harmed by the loss of their services and our inability to make up for such loss with qualified replacements.
Additionally, there can be no assurance that we will ultimately realize the anticipated benefits of these strategic initiatives, or that these strategic initiatives will positively impact our organization. 27 Table of Contents We depend on our executive officers and other key individuals to continue the implementation of our long-term business strategy and could be harmed by the loss of their services and our inability to make up for such loss with qualified replacements.
Computer break-ins, phishing and other disruptions could also jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure.
Cyberattacks and other technology disruptions could also jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, and those we maintain with our services providers and vendors.
Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations. We may incur meaningful costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may suffer.
Additionally, investors and shareholder advocates are placing ever increasing emphasis on how corporations address ESG issues in their business strategy when making investment decisions and when developing their investment theses and proxy recommendations.
Depending on the interest rate environment, it is possible that the fair value of our mortgage servicing rights may be reduced in the future.
Depending on the interest rate environment, it is possible that the fair value of our mortgage servicing rights may be reduced in the future. If such changes in fair value significantly reduce the carrying value of our mortgage servicing rights, our business, financial condition and results of operations could be adversely affected.
In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our needing to revise or restate prior period financial statements.
In some cases, we could be required to apply a new or revised standard retrospectively, or apply an existing standard differently, also retrospectively, in each case resulting in our needing to revise or restate prior period financial statements. 33 Table of Contents Risks related to the business environment and our industry The Company is subject to extensive government regulation and supervision, which may interfere with our ability to conduct our business and may negatively impact our financial results .
The computer systems and network infrastructure we use may be vulnerable to physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as security breaches, denial of service attacks, viruses, worms and other disruptive problems caused by hackers.
The computer systems and network infrastructure we use, including those we maintain with our service providers and vendors may be vulnerable to physical theft, fire, power loss, telecommunications failure or a similar catastrophic event, as well as cyberattacks, including through, for example, phishing attempts, brute force attacks, denial of service attacks, viruses or other malicious code, exploiting software vulnerabilities (including “zero-day attacks”), ransomware or other malware and supply chain attacks, and other disruptive problems caused by criminal threat actors.
While we have policies, procedures, and systems designed to prevent or limit the effect of possible failures, interruptions, or breaches in security of information systems and business continuity programs designed to provide services in the case of such events, there is no guarantee that these safeguards or programs will address all of the threats that continue to evolve. ​ System failure or breaches of our network security, or the security of our third-party data processing partner, including as a result of cyberattacks or data security breaches, could subject us to increased operating costs as well as litigation and other liabilities.
While we have policies, procedures, and systems designed to prevent or limit the effect of possible failures, interruptions, or breaches in security of information systems and business continuity programs designed to provide services in the case of such events, there is no guarantee that these safeguards or programs will address all of the threats that continue to evolve. ​ The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact our business. ​ The Company or its third-party (or fourth party) vendors, clients or counterparties may develop or incorporate AI technology in certain business processes, services, or products.
If such changes in fair value significantly reduce the carrying value of our mortgage servicing rights, our business, financial condition and results of operations could be adversely affected. 23 Table of Contents Inflation could negatively impact our business, our profitability and our stock price . Inflation continued rising in 2023, and inflationary pressures may remain elevated into 2024.
Inflation could negatively impact our business, our profitability and our stock price . Inflation continued rising in the fourth quarter of 2024, and inflationary pressures may remain elevated into 2025.
Moreover, the financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the current conflicts between Russia and Ukraine and between Israel and Hamas, which are 22 Table of Contents increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets.
Moreover, the financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict or trade wars.
This could impact our ability to achieve our strategic objectives and may result in changes to our balance sheet position which could, in turn, negatively impact our profitability. ​ Risks related to our common stock Applicable laws and regulations restrict both the ability of the Bank to pay dividends to the Company and the ability of the Company to pay dividends to our shareholders.
See “Business-Supervision and Regulation.” Risks related to our common stock Applicable laws and regulations restrict both the ability of the Bank to pay dividends to the Company and the ability of the Company to pay dividends to our shareholders. Both the Company and the Bank are subject to various regulatory restrictions relating to the payment of dividends.
In addition, ongoing legislative or regulatory uncertainties and changes regarding climate risk management and practices may result in higher regulatory, compliance, credit and reputational risks and costs. Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings.
We may incur meaningful costs with respect to our ESG efforts and if such efforts are negatively perceived, our reputation and stock price may suffer. Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings.
Further, the FRB has increased the benchmark rapidly and has announced an intention to take further actions to mitigate rising inflationary pressures.
Beginning in the third quarter of 2024, the FRB began slowly decreasing interest rates, with future interest rate changes, either increases or decreases uncertain, and dependent on the Federal Reserve's assessment of economic conditions and inflation. Further, the FRB has increased the benchmark rapidly and has announced an intention to take further actions to mitigate rising inflationary pressures.
Removed
Although the FRB increased the target federal funds rate in 2023 to combat inflationary trends, the FRB held the federal funds rate steady in December 2023 for the third consecutive quarter and indicated that the rate is likely to be decreased in 2024 and beyond.
Added
Moreover, our clients could withdraw their deposits in favor of alternative investments.
Removed
Additionally, there can be no assurance that we will ultimately realize the anticipated benefits of these strategic initiatives, or that these strategic initiatives will positively impact our organization.
Added
Finally, our credit union competitors benefit from competitive advantages, including the credit union exemption from paying federal income tax and can, therefore, more aggressively price many products and services.
Removed
Further, such additional capital could result in dilution to our existing shareholders.
Added
The impact of the existing regulatory framework and any future changes to it could negatively affect our ability to compete with these institutions, which could have a material adverse effect on our results of operations and prospects.
Removed
Risks related to the business environment and our industry The Company is subject to extensive government regulation and supervision, which may interfere with our ability to conduct our business and may negatively impact our financial results . The Company, primarily through the Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision.
Added
The development and use of AI presents a number of risks and challenges to the Company’s business.
Removed
See “Business-Supervision and Regulation.” ​ Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system . ​ The closures of Silicon Valley Bank and Signature Bank in March 2023 and First Republic Bank in May 2023, and concerns about similar future events, have generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks like the Company.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
Removed
These market developments have negatively impacted customer confidence in the safety and soundness of regional banks. As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
Added
These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance.
Removed
While the Department of the Treasury, the Federal Reserve, and the FDIC took action to ensure that depositors of these failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.
Added
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Removed
We also anticipate increased regulatory scrutiny – in the course of routine examinations and otherwise – and new regulations directed towards banks of similar size to the Bank, designed to address the recent negative developments in the banking industry, all of which may increase our costs of doing business and reduce our profitability.
Added
In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.
Removed
Among other things, there may be an increased focus by both regulators and investors on deposit composition, the level of uninsured deposits, the level of unrealized losses in either available-for-sale or held-to-maturity securities portfolios, contingent liquidity, CRE loan composition and concentration, capital position, and general oversight and internal control structures regarding the foregoing.
Added
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
Removed
UNRESOLVED STAFF COMMENTS None. ​ 37 Table of Contents
Added
Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.
Added
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. ​ System failure or breaches of our network security, or the security of our third-party data processing partner, including as a result of cyberattacks, could subject us to increased operating costs as well as litigation and other liabilities.
Added
The costs and effects of litigation, investigations or similar matters involving us or other financial institutions or counterparties, or related adverse facts and developments, could materially affect our business, operating results and financial condition. We may be involved from time to time in a variety of litigation, investigations, inquiries, or similar matters arising out of our business.
Added
The Company, primarily through the Bank and certain non-bank subsidiaries, are subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds and the safety and soundness of the banking system as a whole, and not shareholders.
Added
In response to ESG developments (including, in particular DEI initiatives), there are increasing instances of “anti-ESG” legislation and anti-DEI executive orders, adverse media coverage, regulation, and litigation that could have unintended impacts on ordinary banking operations and increase litigation or reputational risk related to actions we choose to take and impact the results of our operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBoard and Management Governance The Company’s Board of Directors recognizes the importance of maintaining the trust and confidence of our customers, employees, and shareholders.
Biggest changeRisk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. 38 Table of Contents Board and Management Governance The Company’s Board of Directors recognizes the importance of maintaining the trust and confidence of our customers, employees, and shareholders, including the risks associated with cybersecurity threats.
The ISO’s responsibilities include the following: ● Developing a plan to conduct and complete the CAT; ● Working with the VP-Director of Technology to evaluate the results of the CAT; ● Leading employee efforts during the CAT to facilitate timely responses from across the Bank; ● Setting the target state of cybersecurity preparedness that best aligns to the Board of Directors’ approved risk appetite; ● Reviewing, approving, and supporting plans to address risk management and control weaknesses; ● Analyzing and presenting the results of the CAT to the Board of Directors; ● Providing periodic cybersecurity updates to the Board of Directors; ● Overseeing the performance of ongoing monitoring to remain nimble and agile in addressing evolving areas of cybersecurity risk; and ● Overseeing the Bank’s cybersecurity preparedness. ● Finally, the Company has established an Information Technology Committee to support the ISO in implementing the CAT, document formal action plans to be presented to the Board of Directors, enforce and implement the controls established by the CAT, and ensure employee compliance with internal controls ​ ​ ​ 39 Table of Contents
The ISO’s responsibilities include the following: ● Developing a plan to conduct and complete the CAT on an annual basis; ● Working with the VP-Director of Technology to evaluate the results of the CAT; ● Leading employee efforts during the CAT to facilitate timely responses from across the Bank; ● Setting the target state of cybersecurity preparedness that best aligns to the Board of Directors’ approved risk appetite; ● Reviewing, approving, and supporting plans to address risk management and control weaknesses; ● Analyzing and presenting the results of the CAT to the full Board of Directors; ● Providing periodic cybersecurity updates to the full Board of Directors; ● Overseeing the performance of ongoing monitoring to remain nimble and agile in addressing evolving areas of cybersecurity risk; and ● Overseeing the Bank’s cybersecurity preparedness. ● Finally, the Company has established an Information Technology Committee to support the ISO in implementing the CAT, document formal action plans to be presented to the Board of Directors, enforce and implement the controls established by the CAT, and ensure employee compliance with internal controls ​ ​ 39 Table of Contents
This program includes the following components: ● Mandatory annual cybersecurity employee training; ● Training specifically targeted to Senior Management and Information Technology staff; ● Bimonthly review of emerging security trends by the Information Technology Committee; ● Mandatory annual cybersecurity Board training; ● Periodic communication to employees highlighting internal control requirements and information about common threats or fraud schemes; and ● Periodic communication to the Bank’s customers highlighting emerging threats and good cybersecurity hygiene.
This program includes the following components: ● Mandatory annual cybersecurity employee training for all employees; ● Training specifically targeted to Senior Management and Information Technology staff; ● Bimonthly review of emerging security trends by the Information Technology Committee; ● Mandatory annual cybersecurity Board training; ● Periodic communication to employees highlighting internal control requirements and information about common threats or fraud schemes; and ● Periodic communication to the Bank’s customers highlighting emerging threats and good cybersecurity hygiene.
The Board of Directors’ responsibilities for cybersecurity risk management and strategy include the following: 38 Table of Contents ● Engaging management in establishing the Bank’s vision, risk appetite, and overall strategic direction; ● Approving plans to ensure the use of the CAT; ● Reviewing management’s analysis of the CAT results, inclusive of any reviews or opinions on the results issued by independent risk management or internal audit functions regarding those results; ● Reviewing management’s determination of whether the Bank’s cybersecurity preparedness is aligned with its risks; ● Reviewing and approving plans to address any risk management or control weaknesses; and ● Reviewing the results of management’s ongoing monitoring of the Bank’s exposure to and preparedness for cyber threats.
The Board of Directors’ responsibilities for cybersecurity risk management and strategy include the following: ● Engaging management in establishing the Bank’s vision, risk appetite, and overall strategic direction; ● Approving plans to ensure the use of the CAT; ● Reviewing management’s analysis of the CAT results, inclusive of any reviews or opinions on the results issued by independent risk management or internal audit functions regarding those results; ● Reviewing management’s determination of whether the Bank’s cybersecurity preparedness is aligned with its risks; ● Reviewing and approving plans to address any risk management or control weaknesses; and ● Reviewing the results of management’s ongoing monitoring of the Bank’s exposure to and preparedness for cyber threats.
The ISO works closely with the head of Information Technology to ensure that the Bank’s cybersecurity controls are in line with established internal culture, Board expectations and risk appetite, and all regulatory requirements.
The ISO works closely with the Director of Technology to ensure that the Bank’s cybersecurity controls are in line with established internal culture, Board expectations and risk appetite, and all regulatory requirements.
For the past four years, he has served as the Bank’s Enterprise Risk Manager, and as ISO for the past two years. In 2022, he earned the Certified Banking Security Manager certification from SBS Cybersecurity.
For the past five years, he has served as the Bank’s Enterprise Risk Manager, and as ISO for the past three years. In 2022, he earned the Certified Banking Security Manager certification from SBS Cybersecurity.
The Bank’s approach to cybersecurity risk management and strategy is based on the FFIEC Cybersecurity Assessment Tool (“CAT”), which provides a repeatable and measurable process for evaluating cybersecurity preparedness and assessing, identifying, and managing material risks from cybersecurity threats.
The Bank’s approach to cybersecurity risk management and strategy is based on the Federal Financial Institutions Examination Council (“FFIEC”) Cybersecurity Assessment Tool (“CAT”), which provides a repeatable and measurable process for evaluating cybersecurity preparedness and assessing, identifying, and managing material risks from cybersecurity threats.
The Company has also appointed an ISO, who reports directly to the Audit Committee and shares a co-sourced relationship with an outside consulting firm. The ISO has been with Bank First for over 10 years in various operational and administrative roles.
The Company has also appointed an ISO, who reports directly to the Audit Committee and to the Chief Executive Officer and shares a co-sourced relationship with a third party consultant. The ISO has been with Bank First for over 10 years in various operational and administrative roles.
We face risks from certain cybersecurity threats that, if realized, are reasonably likely to materially affect our business strategy, result of operations or financial condition. Please see Part I, Item 1A. Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure.
We face risks from certain cybersecurity threats that, if realized, are reasonably likely to materially affect our business strategy, result of operations or financial condition. Please see Part I, Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeVeterans Street ​ Tomah, Wisconsin, 54660 ​ Own Two Rivers ​ 1703 Lake Street ​ Two Rivers, Wisconsin, 54241 ​ Own Valders ​ 167 Lincoln Street ​ Valders, Wisconsin, 54245 ​ Own Watertown ​ 104 W.
Biggest changeVeterans Street ​ Tomah, Wisconsin, 54660 ​ Own Two Rivers ​ 1703 Lake Street ​ Two Rivers, Wisconsin, 54241 ​ Own Valders ​ 167 Lincoln Street ​ Valders, Wisconsin, 54245 ​ Own Watertown ​ 104 W. Main Street ​ Watertown, Wisconsin, 53094 ​ Own Waupaca ​ 111 Jefferson Street ​ Waupaca, Wisconsin, 54981 ​ Own Wautoma ​ 105 N.
Main Street ​ Denmark, Wisconsin, 54208 ​ Own Fond du Lac ​ 245 N. Peters Avenue ​ Fond du Lac, Wisconsin, 54935 ​ Own Howard ​ 1951 Shawano Avenue ​ Howard, Wisconsin, 54303 ​ Own Iola ​ 295 E.
Main Street ​ Denmark, Wisconsin, 54208 ​ Own Fond du Lac ​ 825 W. Johnson Street ​ Fond du Lac, Wisconsin, 54935 ​ Own Howard ​ 1951 Shawano Avenue ​ Howard, Wisconsin, 54303 ​ Own Iola ​ 295 E.
ITEM 2. PROPERTIES Our main office is located at 402 North 8 th Street, Manitowoc, Wisconsin 54220. In addition, the Bank operates twenty-six (26) additional branches located in fourteen (14) counties in Wisconsin, which includes the branches that were acquired in connection with the Company’s recent acquisitions. The addresses of these offices are provided below.
ITEM 2. PROPERTIES Our main office is located at 402 North 8 th Street, Manitowoc, Wisconsin 54220. Including its main office, the Bank operates twenty-six (26) additional branches located in fourteen (14) counties in Wisconsin. The addresses of these offices are provided below.
Main Street ​ Watertown, Wisconsin, 53094 ​ Own Waupaca ​ 111 Jefferson Street ​ Waupaca, Wisconsin, 54981 ​ Own Wautoma ​ 105 Plaza Road ​ Wautoma, Wisconsin, 54982 ​ Own ​ ​ ​ ​ ​ ​ ​ ​
Plaza Road ​ Wautoma, Wisconsin, 54982 ​ Own ​ ​ ​ ​ ​ ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to October 23, 2018, Bank First’s common stock was traded on the OTC Market Group’s Pink tier under the symbol “BFNC”. The trading volume of Bank First’s common stock is less than that of banks with larger market capitalizations, even though Bank First has improved accessibility to its common stock first through its listing on Nasdaq.
Biggest changeThe trading volume of Bank First’s common stock is less than that of banks with larger market capitalizations, even though Bank First has improved accessibility to its common stock first through its listing on Nasdaq. As of February 28, 2025, Bank First had approximately 1,583 shareholders of record, 11,515,130 shares issued and 9,994,639 shares outstanding.
The table below sets forth information regarding repurchases of our common stock during the fourth quarter of 2023 under that program and other repurchases. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum Number ​ ​ ​ ​ ​ ​ ​ of Shares Repurchased as ​ of Shares ​ ​ ​ ​ ​ ​ ​ Part of ​ that May Yet Be ​ ​ Total Number of Shares ​ Average Price Paid per ​ Publicly Announced ​ Purchased Under the (in thousands, except per share data) ​ Repurchased ​ Share (1) ​ Plans or Programs ​ Plans or Programs (2) October 2023 14,611 ​ $ 76.59 12,611 270,346 November 2023 — ​ — — 270,346 December 2023 — ​ — — 270,346 Total 14,611 ​ $ 76.59 12,611 270,346 (1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transactions expenses.
The table below sets forth information regarding repurchases of our common stock during the fourth quarter of 2024 under that program and other repurchases. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number Maximum Number ​ ​ ​ ​ ​ ​ ​ of Shares Repurchased as ​ of Shares ​ ​ ​ ​ ​ ​ ​ Part of ​ that May Yet Be ​ ​ Total Number of Shares ​ Average Price Paid per ​ Publicly Announced ​ Purchased Under the (in thousands, except per share data) ​ Repurchased ​ Share (1) ​ Plans or Programs ​ Plans or Programs (2) October 2024 — ​ $ — — 175,611 November 2024 — ​ — — 175,611 December 2024 — ​ — — 175,611 Total — ​ $ — — 175,611 (1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transactions expenses.
(2) Based on the closing price per share as of December 31, 2023 ($86.66). The Inflation Reduction Act of 2022 (“IRA”) created a new nondeductible 1% excise tax on repurchases of corporate stock by certain publicly traded corporations or their specified affiliates after December 31, 2022.
(2) Based on the closing price per share as of December 31, 2024 ($99.09). The Inflation Reduction Act of 2022 (“IRA”) created a new nondeductible 1% excise tax on repurchases of corporate stock by certain publicly traded corporations or their specified affiliates after December 31, 2022.
Share Repurchase Program On April 18, 2023, the Company reactivated its share repurchase program, pursuant to which the Company may repurchase up to $26 million of its common stock, par value $0.01 per share, for a period of one (1) year ending on April 17, 2024.
Share Repurchase Program On February 21, 2024, the Company reactivated its share repurchase program, pursuant to which the Company may repurchase up to $30 million of its common stock, par value $0.01 per share, for a period of one (1) year ending on February 20, 2025.
The program was announced in a Current Report on Form 8-K on April 19, 2023.
The program was announced in a Current Report on Form 8-K on February 21, 2024.
The impact of the IRA on our consolidated financial statements will be dependent on the extent of stock repurchases made in current and future periods. 41 Table of Contents Performance Graph The following graph compares the yearly percentage change in cumulative shareholder return on Bank First stock with the cumulative total return of the Russell 2000 Index and the Nasdaq Bank Index for the last five fiscal years (assuming a $100 investment on December 31, 2018 and reinvestment of all dividends).
There was no impact to our financial condition or result of operations as a result of this tax during the period presented above. 41 Table of Contents Performance Graph The following graph compares the yearly percentage change in cumulative shareholder return on Bank First common stock with the cumulative total return of the Russell 2000 Index and the Nasdaq Bank Index for the last five fiscal years (assuming a $100 investment on December 31, 2019 and reinvestment of all dividends).
The following performance graph and related information are neither “soliciting material” nor “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such filing. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 BFC ​ $ 100.00 ​ $ 152.29 ​ $ 142.81 ​ $ 161.74 ​ $ 210.36 ​ $ 199.27 Russell 2000 ​ 100.00 ​ 123.72 ​ 146.44 ​ 166.50 ​ 130.60 ​ 150.31 Nasdaq Bank ​ 100.00 ​ 132.14 ​ 114.13 ​ 154.12 ​ 117.55 ​ 111.93 ​ ​ ITEM 6.
The following performance graph and related information are neither “soliciting material” nor “filed” with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such filing. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 BFC ​ $ 100.00 ​ $ 93.78 ​ $ 106.21 ​ $ 138.13 ​ $ 130.76 ​ $ 152.04 Russell 2000 ​ 100.00 ​ 118.36 ​ 134.57 ​ 105.56 ​ 121.49 ​ 133.60 Nasdaq Bank ​ 100.00 ​ 86.37 ​ 116.64 ​ 88.96 ​ 84.70 ​ 112.45 ​ ​ ITEM 6.
The excise tax applies to all of the stock of a covered corporation regardless of whether the corporation has profits or losses.
The excise tax applies to all of the stock of a covered corporation regardless of whether the corporation has profits or losses. The impact of the IRA on our consolidated financial statements will be dependent on the extent of stock repurchases made in current and future periods.
Removed
As of February 29, 2024, Bank First had approximately 1,658 shareholders of record, 11,515,130 shares issued and 10,141,926 shares outstanding.
Added
Dividends from the Bank are the Company's primary source of funds to pay dividends to its shareholders.
Added
Under the National Bank Act, national banks may in any calendar year, without the approval of the OCC, pay dividends to the extent of net profits for that year, plus retained net profits for the preceding two years (less any required transfers to surplus).
Added
The need for the Bank to maintain adequate capital also limits dividends that may be paid to the Company. For additional information regarding restrictions on the ability of the Bank to pay dividends to the Company see “Business— Supervision and Regulation—Payment of Dividends” of this Form 10-K.
Added
The Company may repurchase shares from time to time in open market transactions or through privately negotiated transactions at the Company’s discretion and in accordance with applicable securities laws. The timing, price, volume and nature of any share repurchases will be based on market conditions and other factors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe average rate paid on interest-bearing liabilities is equal to annualized interest expense as a percentage of average interest-bearing liabilities. 48 Table of Contents The following tables set forth the distribution of our average assets, liabilities and shareholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ Interest ​ Rate ​ ​ ​ ​ Interest ​ Rate ​ ​ ​ ​ Interest ​ Rate ​ ​ Average ​ Income/ ​ Earned/ ​ Average ​ Income/ ​ Earned/ ​ Average ​ Income/ ​ Earned/ ​ Balance Expenses (1) Paid (1) Balance Expenses (1) Paid (1) Balance Expenses (1) Paid (1) ​ ​ ​ (dollars in thousands) ​ ASSETS ​ ​ ​ ​ ​ ​ ​ Interest-earning assets ​ ​ ​ ​ ​ ​ ​ Loans (2) ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 3,172,468 ​ $ 165,113 5.20 % $ 2,434,554 ​ $ 103,612 4.26 % $ 2,128,327 ​ $ 90,172 4.24 % Tax-exempt ​ 103,957 ​ 4,686 4.51 % 96,183 ​ 4,227 4.39 % 88,978 ​ 4,113 4.62 % Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable (available for sale) ​ 185,867 ​ 5,851 3.15 % 227,101 ​ 5,230 2.30 % 103,277 ​ 2,788 2.70 % Tax-exempt (available for sale) ​ 36,690 ​ 1,195 3.26 % 81,181 ​ 2,140 2.64 % 70,864 ​ 2,207 3.11 % Taxable (held to maturity) ​ 71,908 ​ 2,678 3.72 % 24,416 ​ 670 2.74 % — ​ — — % Tax-exempt (held to maturity) ​ 4,426 ​ 115 2.60 % 5,396 ​ 139 2.58 % 6,098 ​ 155 2.54 % Cash and due from banks ​ 79,822 ​ 4,104 5.14 % 220,929 ​ 1,883 0.85 % 237,021 ​ 310 0.13 % Total interest-earning assets ​ 3,655,138 ​ 183,742 5.03 % 3,089,760 ​ 117,901 3.82 % 2,634,565 ​ 99,745 3.79 % Non interest-earning assets ​ 447,934 ​ ​ 280,249 ​ ​ 222,548 ​ ​ Allowance for loan losses ​ (41,714) ​ ​ (22,152) ​ ​ (19,320) ​ ​ Total assets ​ $ 4,061,358 ​ ​ $ 3,347,857 ​ ​ $ 2,837,793 ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Checking accounts ​ $ 293,568 ​ $ 5,362 1.83 % $ 253,443 ​ $ 1,075 0.42 % $ 209,970 ​ $ 252 0.12 % Savings accounts ​ 833,360 ​ 9,796 1.18 % 691,599 ​ 3,099 0.45 % 497,958 ​ 1,773 0.36 % Money market accounts ​ 665,988 ​ 12,722 1.91 % 666,717 ​ 3,025 0.45 % 664,591 ​ 2,115 0.32 % Certificates of deposit ​ 509,273 ​ 14,396 2.83 % 286,054 ​ 2,818 0.99 % 278,602 ​ 2,967 1.06 % Brokered Deposits ​ 3,184 ​ 90 2.83 % 8,587 ​ 251 2.92 % 14,718 ​ 420 2.85 % Total interest bearing deposits ​ 2,305,373 ​ 42,366 1.84 % 1,906,400 ​ 10,268 0.54 % 1,665,839 ​ 7,527 0.45 % Other borrowed funds ​ 97,384 ​ 6,637 6.82 % 185,329 ​ 2,181 1.18 % 63,474 ​ 777 1.22 % Total interest-bearing liabilities ​ 2,402,757 ​ 49,003 2.04 % 2,091,729 ​ 12,449 0.60 % 1,729,313 ​ 8,304 0.48 % Non-interest bearing liabilities ​ ​ ​ ​ ​ ​ ​ ​ Demand Deposits ​ 1,078,468 ​ ​ 878,727 ​ ​ 785,364 ​ ​ Other liabilities ​ 10,533 ​ ​ 4,971 ​ ​ 12,746 ​ ​ Total Liabilities ​ 3,491,758 ​ ​ 2,975,427 ​ ​ 2,527,423 ​ ​ Shareholders’ equity ​ 569,600 ​ ​ 372,430 ​ ​ 310,370 ​ ​ Total liabilities & shareholders' equity ​ $ 4,061,358 ​ ​ $ 3,347,857 ​ ​ $ 2,837,793 ​ ​ Net interest income on a fully taxable equivalent basis ​ ​ ​ 134,739 ​ ​ ​ 105,452 ​ ​ ​ 91,441 ​ Less taxable equivalent adjustment ​ ​ ​ ​ (1,259) ​ ​ ​ ​ ​ ​ (1,366) ​ ​ ​ ​ ​ ​ (1,359) ​ ​ ​ Net interest income ​ ​ $ 133,480 ​ ​ $ 104,086 ​ ​ $ 90,082 ​ Net interest spread (3) ​ ​ ​ ​ 2.99 % ​ ​ ​ 3.22 % ​ ​ ​ 3.31 % Net interest margin (4) ​ ​ 3.69 % ​ 3.41 % ​ 3.47 % (1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.
Biggest changeThe following tables set forth the distribution of our average assets, liabilities and shareholders’ equity, and average rates earned or paid on a fully taxable equivalent basis for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ Interest ​ Rate ​ ​ ​ ​ Interest ​ Rate ​ ​ ​ ​ Interest ​ Rate ​ ​ Average ​ Income/ ​ Earned/ ​ Average ​ Income/ ​ Earned/ ​ Average ​ Income/ ​ Earned/ ​ Balance Expenses (1) Paid (1) Balance Expenses (1) Paid (1) Balance Expenses (1) Paid (1) ​ ​ ​ (dollars in thousands) ​ ASSETS ​ ​ ​ ​ ​ ​ ​ Interest-earning assets ​ ​ ​ ​ ​ ​ ​ Loans (2) ​ ​ ​ ​ ​ ​ ​ Taxable ​ $ 3,310,890 ​ $ 184,853 5.58 % $ 3,172,468 ​ $ 165,113 5.20 % $ 2,434,554 ​ $ 103,612 4.26 % Tax-exempt ​ 111,467 ​ 5,258 4.72 % 103,957 ​ 4,686 4.51 % 96,183 ​ 4,227 4.39 % Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable (available for sale) ​ 129,832 ​ 6,146 4.73 % 185,867 ​ 5,851 3.15 % 227,101 ​ 5,230 2.30 % Tax-exempt (available for sale) ​ 33,204 ​ 1,130 3.40 % 36,690 ​ 1,195 3.26 % 81,181 ​ 2,140 2.64 % Taxable (held to maturity) ​ 108,849 ​ 4,242 3.90 % 71,908 ​ 2,678 3.72 % 24,416 ​ 670 2.74 % Tax-exempt (held to maturity) ​ 3,435 ​ 90 2.62 % 4,426 ​ 115 2.60 % 5,396 ​ 139 2.58 % Cash and due from banks ​ 111,379 ​ 6,046 5.43 % 79,822 ​ 4,104 5.14 % 220,929 ​ 1,883 0.85 % Total interest-earning assets ​ 3,809,056 ​ 207,765 5.45 % 3,655,138 ​ 183,742 5.03 % 3,089,760 ​ 117,901 3.82 % Non-interest-earning assets ​ 443,691 ​ ​ 447,934 ​ ​ 280,249 ​ ​ Allowance for loan losses ​ (44,511) ​ ​ (41,714) ​ ​ (22,152) ​ ​ Total assets ​ $ 4,208,236 ​ ​ $ 4,061,358 ​ ​ $ 3,347,857 ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Checking accounts ​ $ 401,990 ​ $ 11,132 2.77 % $ 293,568 ​ $ 5,362 1.83 % $ 253,443 ​ $ 1,075 0.42 % Savings accounts ​ 816,410 ​ 12,240 1.50 % 833,360 ​ 9,796 1.18 % 691,599 ​ 3,099 0.45 % Money market accounts ​ 616,964 ​ 14,880 2.41 % 665,988 ​ 12,722 1.91 % 666,717 ​ 3,025 0.45 % Certificates of deposit ​ 613,593 ​ 25,613 4.17 % 509,273 ​ 14,396 2.83 % 286,054 ​ 2,818 0.99 % Brokered Deposits ​ 7,662 ​ 303 3.95 % 3,184 ​ 90 2.83 % 8,587 ​ 251 2.92 % Total interest-bearing deposits ​ 2,456,619 ​ 64,168 2.61 % 2,305,373 ​ 42,366 1.84 % 1,906,400 ​ 10,268 0.54 % Other borrowed funds ​ 98,241 ​ 4,437 4.52 % 97,384 ​ 6,637 6.82 % 185,329 ​ 2,181 1.18 % Total interest-bearing liabilities ​ 2,554,860 ​ 68,605 2.69 % 2,402,757 ​ 49,003 2.04 % 2,091,729 ​ 12,449 0.60 % Non-interest bearing liabilities ​ ​ ​ ​ ​ ​ ​ Demand Deposits ​ 1,000,772 ​ ​ 1,078,468 ​ ​ 878,727 ​ ​ Other liabilities ​ 32,820 ​ ​ 10,533 ​ ​ 4,971 ​ ​ Total Liabilities ​ 3,588,452 ​ ​ 3,491,758 ​ ​ 2,975,427 ​ ​ Shareholders’ equity ​ 619,784 ​ ​ 569,600 ​ ​ 372,430 ​ ​ Total liabilities & shareholders' equity ​ $ 4,208,236 ​ ​ $ 4,061,358 ​ ​ $ 3,347,857 ​ ​ Net interest income on a fully taxable equivalent basis ​ ​ ​ 139,160 ​ ​ ​ 134,739 ​ ​ ​ 105,452 ​ Less taxable equivalent adjustment ​ ​ ​ ​ (1,360) ​ ​ ​ ​ ​ ​ (1,259) ​ ​ ​ ​ ​ ​ (1,366) ​ ​ ​ Net interest income ​ ​ $ 137,800 ​ ​ $ 133,480 ​ ​ $ 104,086 ​ Net interest spread (3) ​ ​ ​ ​ 2.77 % ​ ​ ​ 2.99 % ​ ​ ​ 3.22 % Net interest margin (4) ​ ​ 3.65 % ​ 3.69 % ​ 3.41 % (1) Annualized on a fully taxable equivalent basis calculated using a federal tax rate of 21%.
LIQUIDITY AND CAPITAL RESOURCES Liquidity. Liquidity is defined as the Company’s ability to generate adequate cash to meet its needs for day-to-day operations and material long and short-term commitments. Liquidity is the risk of potential loss if we were unable to meet our funding requirements at a reasonable cost.
LIQUIDITY, CASH FLOWS, AND CAPITAL RESOURCES Liquidity. Liquidity is defined as the Company’s ability to generate adequate cash to meet its needs for day-to-day operations and material long and short-term commitments. Liquidity is the risk of potential loss if we were unable to meet our funding requirements at a reasonable cost.
Securities are classified as held to maturity or available for sale at the time of purchase. Obligations of states and political subdivisions and mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises, make up the largest components of the securities portfolio.
Securities are classified as held to maturity or available for sale at the time of purchase. U.S. Treasury securities, obligations of states and political subdivisions, and mortgage-backed securities, all of which are issued by U.S. government agencies or U.S. government-sponsored enterprises, make up the largest components of the securities portfolio.
The Company had outstanding balances of $6.0 million under these agreements at December 31, 2023 and 2022. 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 December 31, 2023 and 2022.
The Company had outstanding balances of $6.0 million under these agreements at December 31, 2024 and 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 December 31, 2024 and 2023.
(4) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets. 49 Table of Contents Rate/Volume Analysis The following tables describe the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated.
(4) Net interest margin represents net interest income on a fully tax equivalent basis as a percentage of average interest-earning assets. 48 Table of Contents Rate/Volume Analysis The following tables describe the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated.
At December 31, 2023 and December 31, 2022, all of the loans to directors and officers were performing according to their original terms. Loan segments Changes in the principal segments of our loan portfolio are discussed below. Descriptions of and risks related to these segments can be found in the consolidated financial statements and footnotes presented elsewhere in this report.
At December 31, 2024 and December 31, 2023, all of the loans to directors and officers were performing according to their original terms. Loan segments Changes in the principal segments of our loan portfolio are discussed below. Descriptions of and risks related to these segments can be found in the consolidated financial statements and footnotes presented elsewhere in this report.
Furthermore, we are committed to collecting on all of our loans and, as a result, at times have lower net charge-offs compared to many of our peer banks. We believe that our commitment to collecting on all of our loans results in higher loan recoveries. 54 Table of Contents Our nonperforming assets consist of nonperforming loans and foreclosed real estate.
Furthermore, we are committed to collecting on all of our loans and, as a result, at times have lower net charge-offs compared to many of our peer banks. We believe that our commitment to collecting on all of our loans results in higher loan recoveries. 53 Table of Contents Our nonperforming assets consist of nonperforming loans and foreclosed real estate.
Additional information about these policies can be found in Note 1 of our consolidated financial statements as of December 31, 2023, included elsewhere in this Annual Report on Form 10-K. Business Combinations, Core Deposit Intangible and Acquired Loans.
Additional information about these policies can be found in Note 1 of our consolidated financial statements as of December 31, 2024, included elsewhere in this Annual Report on Form 10-K. Business Combinations, Core Deposit Intangible and Acquired Loans.
Our additional sources of funds are scheduled payments and prepayments of principal and interest on loans and investment securities and fee income and proceeds from the sales of loans and securities. Deposits. Our current deposit products include non-interest bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits.
Our additional sources of funds are scheduled payments and prepayments of principal and interest on loans and investment securities and fee income and proceeds from the sales of loans and securities. Deposits. Our current deposit products include noninterest-bearing and interest-bearing checking accounts, savings accounts, money market accounts, and certificate of deposits.
Allowance for Credit Losses — Loans. The ACL – Loans represents management’s estimate of expected credit losses in the Company’s loan portfolio at the balance sheet date. The Company estimates the ACL – Loans based on the amortized cost basis of the underlying loan using a current expected credit loss methodology (“CECL”).
The ACL – Loans represents management’s estimate of expected credit losses in the Company’s loan portfolio at the balance sheet date. The Company estimates the ACL – Loans based on the amortized cost basis of the underlying loan using a current expected credit loss methodology (“CECL”).
Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After One, But ​ After Five, But ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Within One Year ​ Within Five Years ​ Within Ten Years ​ After Ten Years ​ Total ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average At December 31, 2023 Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) ​ ​ (dollars in thousands) ​ Available for sale securities ​ ​ ​ ​ ​ ​ Obligations of U.S.
Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After One, But ​ After Five, But ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Within One Year ​ Within Five Years ​ Within Ten Years ​ After Ten Years ​ Total ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average At December 31, 2024 Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) ​ ​ (dollars in thousands) ​ Available for sale securities ​ ​ ​ ​ ​ ​ U.S.
The following tables summarize the dollar amount of loans maturing in our portfolio based on their loan type, fixed or variable rate of interest, and contractual terms to maturity at December 31, 2023.
The following tables summarize the dollar amount of loans maturing in our portfolio based on their loan type, fixed or variable rate of interest, and contractual terms to maturity at December 31, 2024.
However, we may also obtain advances from the FHLB, purchase federal funds and engage in overnight borrowing from the Federal Reserve, correspondent banks, or enter into repurchase agreements. Securities sold under repurchase agreements The Company has securities sold under repurchase agreements which have contractual maturities up to one year from the transaction date with variable and fixed rate terms.
However, we may also obtain advances from the FHLB, purchase federal funds and engage in overnight borrowing from the Federal Reserve, correspondent banks, or enter into repurchase agreements. Securities sold under repurchase agreements The Company had securities sold under repurchase agreements which had contractual maturities up to one year from the transaction date with variable and fixed rate terms.
Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at December 31, 2023. 55 Table of Contents Nonaccrual Loans Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection.
Management has evaluated the aforementioned loans and other loans classified as nonperforming and believes that all nonperforming loans have been adequately reserved for in the allowance for credit losses at December 31, 2024. 54 Table of Contents Nonaccrual Loans Loans are typically placed on nonaccrual status when any payment of principal and/or interest is 90 days or more past due, unless the collateral is sufficient to cover both principal and interest and the loan is in the process of collection.
Results of operations of the acquired business are included in the statement of income from the effective date of the acquisition. 44 Table of Contents ​ The primary identifiable intangible asset we typically record in connection with a whole bank or branch acquisition is the value of the core deposit intangible which represents the estimated value of the long-term deposit relationships acquired in the transaction.
Results of operations of the acquired business are included in the statement of income from the effective date of the acquisition. ​ The primary identifiable intangible asset we typically record in connection with a whole bank or branch acquisition is the value of the core deposit intangible which represents the estimated value of the long-term deposit relationships acquired in the transaction.
RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2023 and 2022 and results of operations for each of the years then ended.
RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2024 and 2023 and results of operations for each of the years then ended.
The capital amounts and the classifications are also subject to qualitative judgment by the regulator in regards to risk weighting and other factors. See “Business—Supervision and Regulation—Capital Requirements.” The following table reflects capital ratios computed pursuant to the regulatory capital rules as applicable to the Company and the Bank.
The capital amounts and the classifications are also subject to qualitative judgment by the regulator in regards to risk weighting and other factors. See “Business—Supervision and Regulation—Capital Requirements.” 62 Table of Contents The following table reflects capital ratios computed pursuant to the regulatory capital rules as applicable to the Company and the Bank.
We seek to maximize net interest income without exposing the Company to an 45 Table of Contents excessive level of interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.
We seek to maximize net interest income without exposing the Company to an excessive level of interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.
The other loans category consists primarily of overdrawn depository accounts, loans utilized to purchase or carry securities and loans to nonprofit organizations. 53 Table of Contents Loan Portfolio Maturities.
The other loans category consists primarily of overdrawn depository accounts, loans utilized to purchase or carry securities and loans to nonprofit organizations. 52 Table of Contents Loan Portfolio Maturities.
("Hometown"), a bank holding company headquartered in Fond du Lac, Wisconsin, pursuant to the merger agreement, dated as of July 25, 2022, by and between the Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, 43 Table of Contents Hometown's wholly-owned banking subsidiary, merged with and into the Bank.
("Hometown"), a bank holding company headquartered in Fond du Lac, Wisconsin, pursuant to the merger agreement, dated as of July 25, 2022, by and between the Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, Hometown's wholly-owned banking subsidiary, merged with and into the Bank.
We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals. Total deposits were $3.43 billion and $3.06 billion as of December 31, 2023 and 2022, respectively.
We rely on our competitive pricing and products, quality customer service, and convenient locations and hours to attract and retain deposits. Deposit rates and terms are based primarily on current business strategies, market interest rates, liquidity requirements and our deposit growth goals. Total deposits were $3.66 billion and $3.43 billion as of December 31, 2024 and 2023, respectively.
For additional information regarding interest rates and changes in net interest income see “Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Sensitivity.” Inflation may have impacts on the Bank’s customers, on businesses and consumers and their ability or willingness to invest, save or 64 Table of Contents spend, and perhaps on their ability to repay loans.
For additional information regarding interest rates and changes in net interest income see “Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Sensitivity.” Inflation may have impacts on the Bank’s customers, on businesses and consumers and their ability or willingness to invest, save or spend, and perhaps on their ability to repay loans.
Our loan portfolio is our most significant earning asset, comprising 79.3%, 79.1% and 76.1% of our total assets as of December 31, 2023, 2022 and 2021, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives.
Our loan portfolio is our most significant earning asset, comprising 78.3%, 79.3% and 79.1% of our total assets as of December 31, 2024, 2023 and 2022, respectively. Our strategy is to grow our loan portfolio by originating quality commercial and consumer loans that comply with our credit policies and that produce revenues consistent with our financial objectives.
As of December 31, 2023, deposit liabilities accounted for approximately 81.3% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area.
As of December 31, 2024, deposit liabilities accounted for approximately 81.4% of our total liabilities and equity. We accept deposits primarily from customers in the communities in which our branches and offices are located, as well as from small businesses and other customers throughout our lending area.
Net interest margin is the amount of net interest income, on a fully taxable-equivalent basis, expressed as a percentage of average interest-earning assets. The average rate earned on earning assets is the amount of annualized taxable equivalent interest income expressed as a percentage of average earning assets.
Net interest margin is the amount of net interest income, on a fully taxable-equivalent basis, expressed as a percentage of average interest-earning assets. The average rate earned on earning assets is the amount of annualized taxable equivalent interest income 47 Table of Contents expressed as a percentage of average earning assets.
We account for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805). We recognize the full fair value of the assets acquired and liabilities assumed and immediately expense transaction costs.
We account for business combinations under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). We recognize the full fair value of the assets acquired and liabilities assumed and immediately expense transaction costs.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 10, 2023 for a discussion and analysis of the more significant factors that affected periods prior to 2022. General.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 29, 2024 for a discussion and analysis of the more significant factors that affected periods prior to 2023. General.
We were servicing mortgage loans sold to others without recourse of approximately $1.18 billion and $866.9 million at December 31, 2023 and 2022, respectively. Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are subsequently amortized as an offset to other income over the estimated period of servicing.
We were servicing mortgage loans sold to others without recourse of approximately $1.17 billion and $1.18 billion at December 31, 2024 and 2023, respectively. Loans sold with the retention of servicing assets result in the capitalization of servicing rights. Loan servicing rights are subsequently amortized as an offset to other income over the estimated period of servicing.
As such, there would likely be impacts on the general appetite of banking products and the credit health of the Bank’s customer base.
As such, there would likely be impacts on the general appetite of banking products and the credit health of the Bank’s customer base. 64 Table of Contents
There were $35.3 million and $1.9 million of advances outstanding from the FHLB at December 31, 2023 and 2022, respectively. See Note 14 “Notes Payable” of the Notes to Consolidated Financial Statements under Part II, Item 8 for additional disclosures. The total loans pledged as collateral were $1.49 billion and $1.15 billion at December 31, 2023 and 2022, respectively.
There were $135.4 million and $35.3 million of advances outstanding from the FHLB at December 31, 2024 and 2023, respectively. See Note 14 “Notes Payable” of the Notes to Consolidated Financial Statements under Part II, Item 8 for additional disclosures. The total loans pledged as collateral were $1.47 billion and $1.49 billion at December 31, 2024 and 2023, respectively.
A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received.
A number of factors are considered in determining the estimated fair value of purchased loans including, among other things, the remaining life of the acquired loans, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods, contractual interest rates compared to market interest rates, and net present value of cash flows expected to be received. 44 Table of Contents Allowance for Credit Losses — Loans.
The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Off-Balance Sheet Arrangements.
The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. ​ 63 Table of Contents Off-Balance Sheet Arrangements.
The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of the Company’s total revenue. Management closely monitors both total net interest income and the net interest margin (net interest income divided by average earning assets).
Net interest income, the difference between interest income and interest expense, is the largest component of the Company’s total revenue. Management closely monitors both total net interest income and the net interest margin (net interest income divided by average earning assets).
Consumer loans include secured and unsecured loans, lines of credit and personal installment loans. Our consumer loans increased by 13.3% and 39.9% during 2023 and 2022, respectively. Other Loans. Our other loans totaled $15.0 million and $18.8 million at December 31, 2023 and 2022, respectively, and are immaterial to the overall loan portfolio.
Consumer loans include secured and unsecured loans, lines of credit and personal installment loans. Our consumer loans increased by 8.7% and 13.3% during 2024 and 2023, respectively. Other Loans. Our other loans totaled $15.6 million and $15.0 million at December 31, 2024 and 2023, respectively, and are immaterial to the overall loan portfolio.
The following table summarizes securities sold under repurchase agreements, and the weighted average interest rates paid: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ (dollars in thousands) 2023 2022 2021 Average daily amount of securities sold under repurchase agreements during the period ​ ​ $ 36,833 ​ $ 25,749 ​ $ 34,637 ​ Weighted average interest rate on average daily securities sold under repurchase agreements ​ ​ 4.92 % 2.11 % 0.03 % Maximum outstanding securities sold under repurchase agreements at any month-end ​ ​ $ 75,747 ​ $ 97,196 ​ $ 57,915 ​ Securities sold under repurchase agreements at period end ​ ​ $ 75,747 ​ $ 97,196 ​ $ 41,122 ​ Weighted average interest rate on securities sold under repurchase agreements at period end ​ ​ 5.31 % 4.31 % 0.02 % ​ 59 Table of Contents Lines of credit and other borrowings The Company’s other borrowings have historically consisted primarily of short-term FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio.
The following table summarizes securities sold under repurchase agreements, and the weighted average interest rates paid: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ (dollars in thousands) 2024 2023 2022 Average daily amount of securities sold under repurchase agreements during the period ​ $ 414 ​ $ 36,833 ​ $ 25,749 ​ Weighted average interest rate on average daily securities sold under repurchase agreements ​ 5.33 % 4.92 % 2.11 % Maximum outstanding securities sold under repurchase agreements at any month-end ​ $ — ​ $ 75,747 ​ $ 97,196 ​ Securities sold under repurchase agreements at period end ​ $ — ​ $ 75,747 ​ $ 97,196 ​ Weighted average interest rate on securities sold under repurchase agreements at period end ​ NA ​ 5.31 % 4.31 % ​ 58 Table of Contents Lines of credit and other borrowings The Company’s other borrowings have historically consisted primarily of short-term FHLB of Chicago advances collateralized by a blanket pledge agreement on the Company’s FHLB capital stock and retail and commercial loans held in the Company’s portfolio.
Our total shareholders’ equity increased during 2023 and 2022 as a result of our profitability, reduced by dividends paid and common share repurchases. Growth in shareholders’ equity was further stimulated by the acquisitions of Hometown during 2023 and Denmark during 2022. 62 Table of Contents Our capital management consists of providing adequate equity to support our current and future operations.
Our total shareholders’ equity increased during 2024 and 2023 as a result of our profitability, reduced by dividends paid and common share repurchases. Growth in shareholders’ equity was further stimulated by the acquisition of Hometown during 2023. Our capital management consists of providing adequate equity to support our current and future operations.
We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations. Total loans increased $449.0 million, or 15.5%, to $3.34 billion as of December 31, 2023 as compared to $2.89 billion as of December 31, 2022.
We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations. Total loans increased $174.2 million, or 5.2%, to $3.52 billion as of December 31, 2024 as compared to $3.34 billion as of December 31, 2023.
The Bank, through its 100% owned subsidiary TVG Holdings, Inc., holds a 40% ownership interest in Ansay & Associates, LLC, an insurance agency providing clients primarily located in Wisconsin with insurance and risk management solutions. The Bank owned 49.8% of UFS, LLC, which provides data processing solutions to over 60 banks in the Midwest, through October 1, 2023.
The Bank, through its 100% owned subsidiary TVG Holdings, Inc., holds a 40% ownership interest in Ansay & Associates, LLC, an insurance agency providing clients primarily located in Wisconsin with insurance and risk management solutions. The Bank owned 49.8% of UFS, LLC through October 1, 2023.
The net balance of capitalized servicing rights amounted to $13.7 million and $9.6 million at December 31, 2023 and 2022, respectively. Consumer Loans. Our consumer loan portfolio totaled $51.0 million and $45.0 million at December 31, 2023 and 2022, respectively, and represented 1% and 2% of our total loans, respectively.
The net balance of capitalized servicing rights amounted to $13.4 million and $13.7 million at December 31, 2024 and 2023, respectively. Consumer Loans. Our consumer loan portfolio totaled $55.4 million and $51.0 million at December 31, 2024 and 2023, respectively, and represented 2% and 1% of our total loans, respectively.
These notes were repaid in full during October 2023. ​ On July 22, 2020, the Company entered into subordinated note agreements with two separate commercial banks. The Company had through December 31, 2020, to borrow funds up to a maximum availability of $6.0 million under each agreement, or $12.0 million total.
On July 22, 2020, the Company entered into subordinated note agreements with two separate commercial banks. The Company had through December 31, 2020, to borrow funds up to a maximum availability of $6.0 million under each agreement, or $12.0 million total.
We recorded a provision for income taxes of $24.3 million for the year ended December 31, 2023, compared to $14.4 million for the year ended December 31, 2022, reflecting effective tax rates of 24.6% and 24.2%, respectively.
We recorded a provision for income taxes of $14.0 million for the year ended December 31, 2024, compared to $24.3 million for the year ended December 31, 2023, reflecting effective tax rates of 17.5% and 24.6%, respectively.
At December 31, 2023 and December 31, 2022, total loans outstanding to such directors and officers and their affiliates were $63.9 million and $70.2 million, respectively.
At December 31, 2024 and December 31, 2023, total loans outstanding to such directors and officers and their affiliates were $62.9 million and $63.9 million, respectively.
The Company recognized a net loss on sale of investment securities of $7.9 million during the year ended December 31, 2023. The Company did not sell any securities in 2022. The following tables set forth the composition and maturities of investment securities as of December 31, 2023 and December 31, 2022.
The Company recognized a negligible net loss on sale of investment securities during the year ended December 31, 2024 and a net loss on sale of investment securities of $7.9 million during the year ended December 31, 2023. The following tables set forth the composition and maturities of investment securities as of December 31, 2024 and December 31, 2023.
We manage our investment portfolio to provide an adequate level of liquidity as well as to maintain neutral interest rate-sensitive positions, while earning an adequate level of investment income without taking undue or excessive risk. Securities available for sale consist of U.S. Treasury securities, obligations of states and political subdivision, agency mortgage-backed securities, corporate notes, and certificates of deposits.
We manage our investment portfolio to provide an adequate level of liquidity as well as to maintain neutral interest rate-sensitive positions, while earning an adequate level of investment income without taking undue or excessive risk. Securities available for sale consist of U.S. Treasury securities, obligations of U.S.
The composition of our nonperforming assets is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, As of December 31, As of December 31, ​ ​ 2023 ​ 2022 ​ 2021 ​ (dollars in thousands) ​ Nonperforming loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ $ 1,344 ​ $ 418 ​ $ 247 ​ Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ 3,877 ​ ​ 2,688 ​ ​ 5,884 ​ Non-owner Occupied ​ ​ — ​ ​ — ​ ​ 650 ​ Multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ ​ — ​ ​ 17 ​ ​ 19 ​ Residential 1-4 family ​ ​ 429 ​ ​ 505 ​ ​ 439 ​ Consumer and other ​ ​ 12 ​ ​ — ​ ​ 2 ​ Total nonaccrual loans ​ ​ 5,662 ​ ​ 3,628 ​ ​ 7,241 ​ Loans past due > 90 days, but still accruing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ ​ 106 ​ ​ — ​ ​ 738 ​ Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ 252 ​ ​ — ​ ​ — ​ Non-owner Occupied ​ ​ — ​ ​ — ​ ​ — ​ Multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ ​ — ​ ​ — ​ ​ — ​ Residential 1-4 family ​ ​ 507 ​ ​ 268 ​ ​ 245 ​ Consumer and other ​ ​ 28 ​ ​ 5 ​ ​ 16 ​ Total loans past due > 90 days, but still accruing ​ ​ 893 ​ ​ 273 ​ ​ 999 ​ Total nonperforming loans ​ $ 6,555 ​ $ 3,901 ​ $ 8,240 ​ OREO ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate owned ​ $ — ​ $ — ​ $ — ​ Residential real estate owned ​ ​ — ​ ​ — ​ ​ 10 ​ Acquired bank property real estate owned ​ ​ 2,573 ​ ​ 2,520 ​ ​ 140 ​ Total OREO ​ $ 2,573 ​ $ 2,520 ​ $ 150 ​ Total nonperforming assets ("NPAs") ​ $ 9,128 ​ $ 6,421 ​ $ 8,390 ​ Accruing modified loans to borrowers experiencing financial difficulty (1) ​ $ 21 ​ $ 450 ​ $ 484 ​ Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans to total loans ​ ​ 0.17 % ​ 0.13 % ​ 0.32 % NPAs to total loans plus OREO ​ ​ 0.27 % ​ 0.22 % ​ 0.38 % NPAs to total assets ​ ​ 0.21 % ​ 0.18 % ​ 0.29 % ACL - Loans to nonaccrual loans ​ ​ 770 % ​ 625 % ​ 281 % ACL - Loans to total loans ​ ​ 1.30 % ​ 0.78 % ​ 0.91 % ​ (1) Amounts prior to January 1, 2023 represent accruing troubled debt restructured loans.
The composition of our nonperforming assets is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ ​ 2024 2023 2022 ​ (dollars in thousands) Nonperforming loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ ​ 794 ​ ​ 1,344 ​ ​ 418 ​ Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ 4,999 ​ ​ 3,877 ​ ​ 2,688 ​ Non-owner Occupied ​ ​ 493 ​ ​ — ​ ​ — ​ Multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ ​ — ​ ​ — ​ ​ 17 ​ Residential 1-4 family ​ ​ 511 ​ ​ 429 ​ ​ 505 ​ Consumer and other ​ ​ 29 ​ ​ 12 ​ ​ — ​ Total nonaccrual loans ​ ​ 6,826 ​ ​ 5,662 ​ ​ 3,628 ​ Loans past due > 90 days, but still accruing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ ​ 328 ​ ​ 106 ​ ​ — ​ Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ — ​ ​ 252 ​ ​ — ​ Non-owner Occupied ​ ​ — ​ ​ — ​ ​ — ​ Multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ ​ — ​ ​ — ​ ​ — ​ Residential 1-4 family ​ ​ 1,294 ​ ​ 507 ​ ​ 268 ​ Consumer and other ​ ​ 48 ​ ​ 28 ​ ​ 5 ​ Total loans past due > 90 days, but still accruing ​ ​ 1,670 ​ ​ 893 ​ ​ 273 ​ Total nonperforming loans ​ $ 8,496 ​ $ 6,555 ​ $ 3,901 ​ OREO ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate owned ​ $ — ​ $ — ​ $ — ​ Residential real estate owned ​ ​ — ​ ​ — ​ ​ — ​ Acquired bank property real estate owned ​ ​ 741 ​ ​ 2,573 ​ ​ 2,520 ​ Total OREO ​ $ 741 ​ $ 2,573 ​ $ 2,520 ​ Total nonperforming assets ("NPAs") ​ $ 9,237 ​ $ 9,128 ​ $ 6,421 ​ Accruing modified loans to borrowers experiencing financial difficulty (1) ​ $ 16 ​ $ 21 ​ $ 450 ​ Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans to total loans ​ ​ 0.19 % ​ 0.17 % ​ 0.13 % NPAs to total loans plus OREO ​ ​ 0.26 % ​ 0.27 % ​ 0.22 % NPAs to total assets ​ ​ 0.21 % ​ 0.21 % ​ 0.18 % ACL - Loans to nonaccrual loans ​ ​ 647 % ​ 770 % ​ 625 % ACL - Loans to total loans ​ ​ 1.26 % ​ 1.30 % ​ 0.78 % (1) Amounts prior to January 1, 2023 represent accruing troubled debt restructured loans.
Management believes that the ACL - Loans is adequate. 57 Table of Contents The following table summarizes an allocation of the ACL - Loans and the related percentage of loans outstanding in each category for the periods below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ (in thousands, except %) Amount Loans Amount Loans Amount Loans Loan Type: ​ ​ ​ Commercial & industrial ​ $ 5,965 15 % $ 4,071 17 % $ 3,699 16 % Commercial real estate - owner occupied ​ 12,285 27 % 5,204 25 % 5,633 26 % Commercial real estate - non-owner occupied ​ 5,700 14 % 2,644 23 % 3,123 14 % Commercial real estate - multi-family ​ ​ 4,754 ​ 10 % ​ 2,761 ​ ​ % ​ 2,028 ​ 10 % Construction & development ​ 3,597 6 % 1,592 7 % 984 6 % Residential 1-4 family ​ 10,620 27 % 5,944 25 % 4,445 26 % Consumer ​ 615 1 % 314 2 % 224 1 % Other loans ​ 73 — % 150 1 % 179 1 % Total allowance ​ $ 43,609 100 % $ 22,680 100 % $ 20,315 100 % ​ SOURCES OF FUNDS General.
Management believes that the ACL - Loans is adequate. 56 Table of Contents The following table summarizes an allocation of the ACL - Loans and the related percentage of loans outstanding in each category for the periods below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31 ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ (in thousands, except %) Amount Loans Amount Loans Amount Loans Loan Type: ​ ​ ​ Commercial & industrial ​ $ 5,394 15 % $ 5,965 15 % $ 4,071 17 % Commercial real estate - owner occupied ​ 11,033 27 % 12,285 27 % 5,204 25 % Commercial real estate - non-owner occupied ​ 4,740 13 % 5,700 14 % 2,644 13 % Commercial real estate - multi-family ​ ​ 3,739 ​ 10 % ​ 4,754 ​ 10 % ​ 2,761 ​ 10 % Construction & development ​ 5,223 7 % 3,597 6 % 1,592 7 % Residential 1-4 family ​ 12,801 26 % 10,620 27 % 5,944 25 % Consumer ​ 1,084 2 % 615 1 % 314 2 % Other loans ​ 137 — % 73 — % 150 1 % Total allowance ​ $ 44,151 100 % $ 43,609 100 % $ 22,680 100 % ​ SOURCES OF FUNDS General.
Our CRE loans increased 25.8% during 2022, primarily as a result of loans acquired from Denmark during 2022. Construction and Development (C&D). Our C&D loan portfolio totaled $200.8 million and $199.7 million at December 31, 2023 and 2022, respectively, and represented 6% and 7% of our total loans, respectively.
Our CRE loans increased 21.5% during 2023, primarily as a result of loans acquired from Hometown during 2023. Construction and Development (C&D). Our C&D loan portfolio totaled $278.0 million and $200.8 million at December 31, 2024 and 2023, respectively, and represented 8% and 6% of our total loans, respectively.
In addition, the ACL - Loans increased due to the acquisition of Hometown, which required a $3.6 million provision for credit losses on non-Purchase Credit Deteriorated (“PCD”) loans and a $5.5 million reserve related to PCD loans.
The Company adopted CECL as of January 1, 2023, which increased the ACL - Loans by $11.0 million. In addition, the ACL - Loans increased during 2023 due to the acquisition of Hometown, which required a $3.6 million provision for credit losses on non-Purchase Credit Deteriorated (“PCD”) loans and a $5.5 million reserve related to PCD loans.
Net charge-offs remain negligible. 56 Table of Contents ​ The following table summarizes the changes in our ACL - Loans for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ Year ended ​ Year ended ​ ​ ​ December 31, ​ December 31, ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ (dollars in thousands) Balance of ACL - Loans at the beginning of period $ 22,680 $ 20,315 $ 17,658 Adoption of CECL ​ ​ 10,972 ​ ​ — ​ ​ — ​ ACL - Loans on PCD loans acquired ​ ​ 5,534 ​ ​ — ​ ​ — ​ Net loans charged-off (recovered): ​ ​ ​ ​ ​ ​ Commercial & industrial ​ (22) ​ (499) ​ 180 Commercial real estate - owner occupied ​ (70) ​ 816 ​ 275 Commercial real estate - non-owner occupied ​ — ​ (360) ​ (5) Commercial real estate - multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ — ​ (152) ​ (143) Residential 1-4 family ​ (106) ​ 26 ​ 110 Consumer ​ — ​ 21 ​ 6 Other Loans ​ 67 ​ (17) ​ 20 Total net loans recovered ​ (131) ​ (165) ​ 443 Provision charged to operating expense ​ 4,292 ​ 2,200 ​ 3,100 Balance of ACL - Loans at end of period ​ $ 43,609 ​ $ 22,680 ​ $ 20,315 ​ Ratio of net charge-offs (recoveries) to average loans by loan composition ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ (0.00) % (0.12) % 0.05 % Commercial real estate - owner occupied ​ (0.01) % 0.13 % 0.05 % Commercial real estate - non-owner occupied ​ — % (0.06) % — % Commercial real estate - multi-family ​ ​ — % ​ — % ​ — % Construction & Development ​ — % (0.09) % (0.11) % Residential 1-4 family ​ (0.01) % — % 0.02 % Consumer ​ — % 0.05 % 0.02 % Other Loans ​ 0.36 % (0.04) % 0.07 % Total net charge-offs (recoveries) to average loans ​ (0.00) % (0.01) % 0.02 % ​ The level of charge-offs depends on many factors, including the national and regional economy.
The Bank has recorded net loan recoveries over each of the last three years. 55 Table of Contents The following table summarizes the changes in our ACL - Loans for the years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ Year ended ​ Year ended ​ ​ ​ December 31, ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ (dollars in thousands) Balance of ACL - Loans at the beginning of period $ 43,609 $ 22,680 $ 20,315 Adoption of CECL ​ ​ — ​ ​ 10,972 ​ ​ — ​ ACL - Loans on PCD loans acquired ​ ​ — ​ ​ 5,534 ​ ​ — ​ Net loans charged-off (recovered): ​ ​ ​ ​ ​ ​ Commercial & industrial ​ 2 ​ (22) ​ (499) Commercial real estate - owner occupied ​ (615) ​ (70) ​ 816 Commercial real estate - non-owner occupied ​ — ​ — ​ (360) Commercial real estate - multi-family ​ ​ — ​ ​ — ​ ​ — ​ Construction & Development ​ — ​ — ​ (152) Residential 1-4 family ​ 31 ​ (106) ​ 26 Consumer ​ 73 ​ — ​ 21 Other Loans ​ 67 ​ 67 ​ (17) Total net loans recovered ​ (442) ​ (131) ​ (165) Provision charged to operating expense ​ (800) ​ 4,682 ​ 2,200 Transfer from (to) ACL - Unfunded Commitments ​ ​ 900 ​ ​ (390) ​ ​ — ​ Balance of ACL - Loans at end of period ​ $ 44,151 ​ $ 43,609 ​ $ 22,680 ​ Ratio of net charge-offs (recoveries) to average loans by loan composition ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ 0.00 % — % (0.12) % Commercial real estate - owner occupied ​ (0.07) % (0.01) % 0.13 % Commercial real estate - non-owner occupied ​ — % — % (0.06) % Commercial real estate - multi-family ​ ​ — % ​ — % ​ — % Construction & Development ​ — % — % (0.09) % Residential 1-4 family ​ 0.00 % (0.01) % — % Consumer ​ 0.14 % — % 0.05 % Other Loans ​ 0.44 % 0.36 % (0.04) % Total net charge-offs (recoveries) to average loans ​ (0.01) % — % (0.01) % ​ The level of charge-offs depends on many factors, including the national and regional economy.
The major components of our noninterest income are listed in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ December 31, ​ 2023 2022 (in thousands) ​ ​ ​ Noninterest Income ​ ​ ​ ​ Service charges ​ ​ $ 7,033 ​ $ 5,810 ​ Income from Ansay ​ ​ ​ 2,922 ​ ​ 2,558 ​ Income from UFS ​ ​ 2,265 ​ 3,055 ​ Loan servicing income ​ ​ 2,860 ​ 1,922 ​ Valuation adjustment on MSR ​ ​ ​ 395 ​ ​ 2,865 ​ Net gain on sales of mortgage loans ​ ​ 897 ​ 1,560 ​ Gain on sale of UFS ​ ​ ​ 38,904 ​ ​ — ​ Other ​ ​ 2,839 ​ 1,931 ​ Total noninterest income ​ ​ $ 58,115 ​ $ 19,701 ​ ​ 47 Table of Contents Noninterest Expense.
The major components of our noninterest income are listed in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ December 31, ​ 2024 2023 (in thousands) ​ ​ Noninterest Income ​ ​ ​ ​ Service charges ​ $ 8,043 ​ $ 7,033 ​ Income from Ansay ​ ​ 3,502 ​ ​ 2,922 ​ Income from UFS ​ — ​ 2,265 ​ Loan servicing income ​ 2,938 ​ 2,860 ​ Valuation adjustment on MSR ​ ​ (299) ​ ​ 395 ​ Net gain on sales of mortgage loans ​ 1,298 ​ 897 ​ Gain on sale of UFS ​ ​ — ​ ​ 38,904 ​ Other ​ 4,198 ​ 2,839 ​ Total noninterest income ​ $ 19,680 ​ $ 58,115 ​ ​ 46 Table of Contents Noninterest Expense.
This evaluation is inherently subjective as it requires material estimates that are susceptible to significant change including the amounts and timing of future cash flows expected to be received on loans. Deferred Tax Assets. Deferred tax assets (“DTA”) and liabilities are determined using the liability method.
This evaluation is inherently subjective as it requires material estimates that are susceptible to significant change including the amounts and timing of future cash flows expected to be received on loans. Recent Accounting Pronouncements.
Residential 1-4 family loans increased 29.3% during 2022, primarily as a result of loans acquired from Denmark during 2022. 52 Table of Contents We do not offer reverse mortgages nor do we offer loans that provide for negative amortization of principal, such as “ Option ARM ” loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan.
We do not offer reverse mortgages nor do we offer loans that provide for negative amortization of principal, such as “ Option ARM ” loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan.
Noninterest-bearing deposits at December 31, 2023 and 2022 were $1.05 billion and $934.1 million, respectively, while interest-bearing deposits were $2.38 billion and $2.13 billion at December 31, 2023 and 2022, respectively.
Noninterest-bearing deposits at December 31, 2024 and 2023 were $1.02 billion and $1.05 billion, respectively, while interest-bearing deposits were $2.64 billion and $2.38 billion at December 31, 2024 and 2023, respectively.
At December 31, 2023, 2022 and 2021, loans individually evaluated had specific reserves of $4,245,000, $8,000 and $964,000, respectively. Levels of specific reserves are dependent on the specific underlying impaired loans at any given time.
At December 31, 2024, 2023 and 2022, loans individually evaluated had specific reserves of $2.4 million, $4.2 million and a negligible amount, respectively. Levels of specific reserves are dependent on the specific underlying impaired loans at any given time.
The contract or notional amounts of those instruments reflect the extent of involvement the Company has in these particular classes of financial instruments. 63 Table of Contents Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, standby and direct pay letters of credit and unadvanced portions of construction and development loans is represented by the contractual amount of those instruments.
Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, standby and direct pay letters of credit and unadvanced portions of construction and development loans is represented by the contractual amount of those instruments.
Total average interest-earning assets increased to $3.66 billion for the year ended December 31, 2023 from $3.09 billion for the year ended December 31, 2022. The Bank’s net interest margin increased twenty-eight basis points to 3.69% for the year ended December 31, 2023, up from 3.41% for the year ended December 31, 2022. Interest Income.
Total average interest-earning assets increased to $3.81 billion for the year ended December 31, 2024 from $3.66 billion for the year ended December 31, 2023. The Bank’s net interest margin decreased four basis points to 3.65% for the year ended December 31, 2024, down from 3.69% for the year ended December 31, 2023. Interest Income.
Based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity. 58 Table of Contents The following tables set forth the average balances of our deposits for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended Year ended Year ended ​ ​ ​ December 31, 2023 December 31, 2022 December 31, 2021 ​ ​ Amount Percent Amount Percent Amount Percent ​ ​ (dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest-bearing demand deposits $ 1,078,468 31.9 % $ 878,727 31.6 % $ 785,364 32.0 % ​ Interest-bearing checking deposits ​ 293,568 8.7 % 253,443 9.1 % 209,970 8.6 % ​ Savings deposits ​ 833,360 24.6 % 691,599 24.8 % 497,958 20.3 % ​ Money market accounts ​ 665,988 19.7 % 666,717 23.9 % 664,591 27.1 % ​ Certificates of deposit ​ 509,273 15.1 % 286,054 10.3 % 278,602 11.4 % ​ Brokered deposits ​ 3,184 0.1 % 8,587 0.3 % 14,718 0.6 % ​ Total ​ $ 3,383,841 100 % $ 2,785,127 ​ 100 % $ 2,451,203 100 % ​ ​ The following table provides information on maturities of certificates of deposits which exceed FDIC insurance limits of $250,000 as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time Deposits over FDIC ​ Portion of Time Deposits in ​ ​ Insurance Limits Excess of FDIC Insurance Limits ​ (dollars in thousands) 3 months or less remaining ​ $ 62,889 ​ $ 34,139 Over 3 to 6 months remaining ​ 26,972 ​ 10,472 Over 6 to 12 months remaining ​ 41,665 ​ 21,665 Over 12 months or more remaining ​ 11,169 ​ 3,919 Total ​ $ 142,695 ​ $ 70,195 ​ Borrowings Deposits and investment securities for sale are the primary source of funds for our lending activities and general business purposes.
Based on historical experience and our current pricing strategy, we believe we will retain a large portion of these non-brokered accounts upon maturity. 57 Table of Contents The following tables set forth the average balances of our deposits for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount Percent Amount Percent Amount Percent ​ ​ ​ (dollars in thousands) ​ Noninterest-bearing demand deposits ​ $ 1,000,772 28.9 % $ 1,078,468 31.9 % $ 878,727 31.6 % ​ Interest-bearing checking deposits ​ 401,990 11.6 % 293,568 8.7 % 253,443 9.1 % ​ Savings deposits ​ 816,410 23.6 % 833,360 24.6 % 691,599 24.8 % ​ Money market accounts ​ 616,964 17.8 % 665,988 19.7 % 666,717 23.9 % ​ Certificates of deposit ​ 613,593 17.7 % 509,273 15.1 % 286,054 10.3 % ​ Brokered deposits ​ 7,662 0.2 % 3,184 0.1 % 8,587 0.3 % ​ Total ​ $ 3,457,391 100 % $ 3,383,841 ​ 100 % $ 2,785,127 100.0 % ​ ​ The following table provides information on maturities of certificates of deposits which exceed FDIC insurance limits of $250,000 as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Time Deposits over FDIC ​ Portion of Time Deposits in ​ ​ Insurance Limits Excess of FDIC Insurance Limits ​ (dollars in thousands) 3 months or less remaining ​ $ 62,208 ​ $ 34,458 Over 3 to 6 months remaining ​ 61,580 ​ 27,580 Over 6 to 12 months remaining ​ 25,849 ​ 9,599 Over 12 months or more remaining ​ 13,689 ​ 6,189 Total ​ $ 163,326 ​ $ 77,826 ​ Borrowings Deposits and investment securities held for sale are the primary source of funds for our lending activities and general business purposes.
Interest expense increased $36.6 million, or 293.6%, to $49.0 million for the year ended December 31, 2023, up from $12.4 million for the year ended December 31, 2022.
Interest expense increased $19.6 million, or 40.0%, to $68.6 million for the year ended December 31, 2024, up from $49.0 million for the year ended December 31, 2023.
The Company redeemed the junior subordinated debenture related to Trust II during December 2023, resulting in Trust II’s dissolution. The Company redeemed the junior subordinated debenture related to Trust I on January 8, 2024, resulting in Trust I’s dissolution.
The Company redeemed the junior subordinated debenture related to Trust II during December 2023, resulting in Trust II’s dissolution. The Company redeemed the junior subordinated debenture related to Trust I on January 8, 2024, resulting in Trust I’s dissolution. INVESTMENT SECURITIES Our securities portfolio consists of securities available for sale and securities held to maturity.
Our loan growth during the year ended December 31, 2023 has been comprised of a decrease of $4.5 million, or 0.9%, in commercial and industrial loans, an increase of $301.1 million, or 21.5%, in commercial real estate loans, an increase of $1.1 million, or 0.6%, in construction and development loans, an increase of $149.1 million, or 20.2%, in residential 1-4 family loans and an increase of $2.2 million, or 3.5%, in consumer and other loans. 51 Table of Contents The following table presents the balance and associated percentage of each major category in our loan portfolio at December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of ​ (In thousands) ​ 2023 ​ Total ​ 2022 ​ Total ​ 2021 ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ $ 487,893 ​ 15 % $ 492,450 ​ 17 % $ 366,166 ​ 16 % Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ 894,596 ​ 27 % ​ 716,963 ​ 25 % ​ 574,565 ​ 26 % Non-owner occupied ​ ​ 472,321 ​ 14 % ​ 391,040 ​ 13 % ​ 298,539 ​ 13 % Multi-family ​ ​ 332,757 ​ 10 % ​ 290,580 ​ 10 % ​ 238,353 ​ 11 % Construction & Development ​ ​ 200,835 ​ 6 % ​ 199,708 ​ 7 % ​ 132,454 ​ 6 % Residential 1-4 family ​ ​ 888,639 ​ 27 % ​ 739,514 ​ 25 % ​ 571,845 ​ 26 % Consumer ​ ​ 50,950 ​ 1 % ​ 44,963 ​ 2 % ​ 32,131 ​ 1 % Other Loans ​ ​ 14,983 ​ — % ​ 18,760 ​ 1 % ​ 21,461 ​ 1 % Total Loans ​ $ 3,342,974 ​ 100 % $ 2,893,978 ​ 100 % $ 2,235,514 ​ 100 % ​ Our directors and officers and their affiliates are customers of, and have other transactions with, the Bank in the normal course of business.
This loan growth was comprised of an increase of $12.5 million, or 2.6%, in commercial and industrial loans, an increase of $55.0 million, or 3.2%, in commercial real estate loans, an increase of $77.1 million, or 38.4%, in construction and development loans, an increase of $24.5 million, or 2.8%, in residential 1-4 family loans and an increase of $5.1 million, or 7.7%, in consumer and other loans. 50 Table of Contents The following table presents the balance and associated percentage of each major category in our loan portfolio at December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of ​ (In thousands) ​ 2024 ​ Total ​ 2023 ​ Total ​ 2022 ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial & industrial ​ $ 500,352 ​ 14 % $ 487,893 ​ 15 % $ 492,450 ​ 17 % Commercial real estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Owner Occupied ​ ​ 968,837 ​ 28 % ​ 894,596 ​ 27 % ​ 716,963 ​ 25 % Non-owner occupied ​ ​ 459,431 ​ 13 % ​ 472,321 ​ 14 % ​ 391,040 ​ 13 % Multi-family ​ ​ 326,408 ​ 9 % ​ 332,757 ​ 10 % ​ 290,580 ​ 10 % Construction & Development ​ ​ 277,971 ​ 8 % ​ 200,835 ​ 6 % ​ 199,708 ​ 7 % Residential 1-4 family ​ ​ 913,187 ​ 26 % ​ 888,639 ​ 27 % ​ 739,514 ​ 25 % Consumer ​ ​ 55,387 ​ 2 % ​ 50,950 ​ 1 % ​ 44,963 ​ 2 % Other Loans ​ ​ 15,595 ​ — % ​ 14,983 ​ — % ​ 18,760 ​ 1 % Total Loans ​ $ 3,517,168 ​ 100 % $ 3,342,974 ​ 100 % $ 2,893,978 ​ 100 % ​ Our directors and officers and their affiliates are customers of, and have other transactions with, the Bank in the normal course of business.
Total interest income increased $65.9 million, or 56.6%, to $182.5 million for the year ended December 31, 2023, up from $116.5 million for the year ended December 31, 2022.
Total interest income increased $23.9 million, or 13.1%, to $206.4 million for the year ended December 31, 2024, up from $182.5 million for the year ended December 31, 2023.
Our net interest margin can also be adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.
Our net interest margin can also be adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments. Net interest income increased by $4.3 million to $137.8 million for the year ended December 31, 2024, from $133.5 million for the year ended December 31, 2023.
Information is provided in each category with respect to: (i) changes attributable to changes in volumes (changes in average balance multiplied by prior year average rate) and (ii) changes attributable to changes in rate (change in average interest rate multiplied by prior year average balance), while (iii) changes attributable to the combined impact of volumes and rates have been allocated proportionately to separate volume and rate categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended December 31, 2023 Twelve Months Ended December 31, 2022 ​ ​ Compared with ​ Compared with ​ ​ Twelve Months Ended December 31, 2022 ​ Twelve Months Ended December 31, 2021 ​ ​ Increase/(Decrease) ​ Increase/(Decrease) ​ ​ Due to Change in ​ Due to Change in ​ ​ Volume ​ Rate ​ Total ​ Volume ​ Rate ​ Total ​ ​ (dollars in thousands) ​ (dollars in thousands) Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable $ 35,439 $ 26,062 $ 61,501 $ 13,031 $ 409 $ 13,440 Tax-exempt ​ ​ 348 ​ ​ 111 ​ ​ 459 ​ ​ 323 ​ ​ (209) ​ ​ 114 Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable (AFS) ​ ​ (1,065) ​ ​ 1,686 ​ ​ 621 ​ ​ 2,905 ​ ​ (463) ​ ​ 2,442 Tax-exempt (AFS) ​ ​ (1,366) ​ ​ 421 ​ ​ (945) ​ ​ 297 ​ ​ (364) ​ ​ (67) Taxable (HTM) ​ ​ 1,696 ​ ​ 312 ​ ​ 2,008 ​ ​ 670 ​ ​ — ​ ​ 670 Tax-exempt (HTM) ​ ​ (25) ​ ​ 1 ​ ​ (24) ​ ​ (18) ​ ​ 2 ​ ​ (16) Cash and due from banks ​ ​ (1,884) ​ ​ 4,105 ​ ​ 2,221 ​ ​ (22) ​ ​ 1,595 ​ ​ 1,573 Total interest income ​ ​ 33,143 ​ ​ 32,698 ​ ​ 65,841 ​ $ 17,186 ​ $ 970 ​ $ 18,156 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Checking accounts ​ $ 196 ​ $ 4,091 ​ $ 4,287 ​ $ 62 ​ $ 761 ​ $ 823 Savings accounts ​ 751 ​ 5,946 ​ 6,697 ​ 797 ​ 529 ​ 1,326 Money market accounts ​ (3) ​ 9,700 ​ 9,697 ​ 7 ​ 903 ​ 910 Certificates of deposit ​ 3,410 ​ 8,168 ​ 11,578 ​ 78 ​ (227) ​ (149) Brokered Deposits ​ (153) ​ (8) ​ (161) ​ (179) ​ 10 ​ (169) Total interest bearing deposits ​ 4,201 ​ 27,897 ​ 32,098 ​ 765 ​ 1,976 ​ 2,741 Other borrowed funds ​ (1,482) ​ 5,938 ​ 4,456 ​ 1,435 ​ (31) ​ 1,404 Total interest expense ​ 2,719 ​ 33,835 ​ 36,554 ​ 2,200 ​ 1,945 ​ 4,145 Change in net interest income ​ $ 30,424 ​ $ (1,137) ​ $ 29,287 ​ $ 14,986 ​ $ (975) ​ $ 14,011 ​ CHANGES IN FINANCIAL CONDITION Total Assets.
Information is provided in each category with respect to: (i) changes attributable to changes in volumes (changes in average balance multiplied by prior year average rate) and (ii) changes attributable to changes in rate (change in average interest rate multiplied by prior year average balance), while (iii) changes attributable to the combined impact of volumes and rates have been allocated proportionately to separate volume and rate categories. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023 ​ ​ Compared with ​ Compared with ​ ​ Twelve Months Ended December 31, 2023 ​ Twelve Months Ended December 31, 2022 ​ ​ Increase/(Decrease) ​ Increase/(Decrease) ​ ​ Due to Change in ​ Due to Change in ​ ​ Volume ​ Rate ​ Total ​ Volume ​ Rate ​ Total ​ ​ (dollars in thousands) ​ (dollars in thousands) Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable $ 7,401 $ 12,339 $ 19,740 $ 35,439 $ 26,062 $ 61,501 Tax-exempt ​ ​ 348 ​ ​ 224 ​ ​ 572 ​ ​ 348 ​ ​ 111 ​ ​ 459 Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable (AFS) ​ ​ (2,097) ​ ​ 2,392 ​ ​ 295 ​ ​ (1,065) ​ ​ 1,686 ​ ​ 621 Tax-exempt (AFS) ​ ​ (117) ​ ​ 52 ​ ​ (65) ​ ​ (1,366) ​ ​ 421 ​ ​ (945) Taxable (HTM) ​ ​ 1,434 ​ ​ 130 ​ ​ 1,564 ​ ​ 1,696 ​ ​ 312 ​ ​ 2,008 Tax-exempt (HTM) ​ ​ (26) ​ ​ 1 ​ ​ (25) ​ ​ (25) ​ ​ 1 ​ ​ (24) Cash and due from banks ​ ​ 1,702 ​ ​ 240 ​ ​ 1,942 ​ ​ (1,884) ​ ​ 4,105 ​ ​ 2,221 Total interest income ​ ​ 8,645 ​ ​ 15,378 ​ ​ 24,023 ​ $ 33,143 ​ $ 32,698 ​ $ 65,841 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deposits ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Checking accounts ​ $ 2,407 ​ $ 3,363 ​ $ 5,770 ​ $ 196 ​ $ 4,091 ​ $ 4,287 Savings accounts ​ (203) ​ 2,647 ​ 2,444 ​ 751 ​ 5,946 ​ 6,697 Money market accounts ​ (990) ​ 3,148 ​ 2,158 ​ (3) ​ 9,700 ​ 9,697 Certificates of deposit ​ 3,371 ​ 7,846 ​ 11,217 ​ 3,410 ​ 8,168 ​ 11,578 Brokered Deposits ​ 166 ​ 47 ​ 213 ​ (153) ​ (8) ​ (161) Total interest bearing deposits ​ 4,751 ​ 17,051 ​ 21,802 ​ 4,201 ​ 27,897 ​ 32,098 Other borrowed funds ​ 58 ​ (2,258) ​ (2,200) ​ (1,482) ​ 5,938 ​ 4,456 Total interest expense ​ 4,809 ​ 14,793 ​ 19,602 ​ 2,719 ​ 33,835 ​ 36,554 Change in net interest income ​ $ 3,836 ​ $ 585 ​ $ 4,421 ​ $ 30,424 ​ $ (1,137) ​ $ 29,287 ​ CHANGES IN FINANCIAL CONDITION Total Assets.
This increase was driven by an increase in average rates earned on interest-earning assets, rising from 3.82% during 2022 to 5.03% during 2023, and a $565.4 million increase in average interest-earning assets during 2023 when compared to 2022. Most of the growth in average interest-earning assets was the result of the acquisitions of Denmark and Hometown. Interest Expense.
This increase was driven by an increase in average rates earned on interest-earning assets, rising from 5.03% during 2023 to 5.45% during 2024, and a $153.9 million increase in average interest-earning assets during 2024 when compared to 2023. Interest Expense.
For more information, see “Business—Supervision and Regulation—Capital Requirements.” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital Required ​ ​ Minimum To Be Well- ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital ​ ​ for Capital Adequacy Plus ​ ​ Capitalized Under prompt ​ ​ ​ ​ ​ ​ ​ ​ Required for Capital ​ ​ Capital Conservation Buffer ​ ​ corrective Action ​ ​ Actual ​ ​ Adequacy ​ ​ Basel III Phase-In Schedule ​ ​ Provisions ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ (dollars in thousands) At December 31, 2023 ​ ​ ​ ​ ​ Bank First Corporation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 484,398 14.0 % $ 276,904 8.0 % $ 363,437 10.5 % ​ N/A N/A ​ Tier I capital (to risk-weighted assets) ​ ​ 437,979 12.7 % ​ 207,678 6.0 % ​ 294,211 8.5 % ​ N/A N/A ​ Common equity tier I capital (to risk-weighted assets) ​ ​ 433,979 12.5 % ​ 155,759 4.5 % ​ 242,291 7.0 % ​ N/A N/A ​ Tier I capital (to average assets) ​ ​ 437,979 11.1 % ​ 158,581 4.0 % ​ 158,581 4.0 % ​ N/A N/A ​ Bank First, N.A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 446,634 12.9 % $ 276,726 8.0 % $ 363,202 10.5 % $ 345,907 10.0 % Tier I capital (to risk-weighted assets) ​ ​ 412,215 11.9 % ​ 207,544 6.0 % ​ 294,021 8.5 % ​ 276,726 8.0 % Common equity tier I capital (to risk-weighted assets) ​ ​ 412,215 11.9 % ​ 155,658 4.5 % ​ 242,135 ​ 7.0 % ​ 224,840 ​ 6.5 % Tier I capital (to average assets) ​ ​ 412,215 10.4 % ​ 158,585 4.0 % ​ 158,585 4.0 % ​ 198,231 5.0 % At December 31, 2022 ​ ​ ​ ​ ​ ​ Bank First Corporation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 387,814 12.2 % $ 253,689 8.0 % $ 332,967 10.5 % ​ N/A N/A ​ Tier I capital (to risk-weighted assets) ​ ​ 341,634 10.8 % ​ 190,627 6.0 % ​ 269,545 8.5 % ​ N/A N/A ​ Common equity tier I capital (to risk-weighted assets) ​ ​ 341,634 10.8 % ​ 142,700 4.5 % ​ 221,978 7.0 % ​ N/A N/A ​ Tier I capital (to average assets) ​ ​ 341,634 9.7 % ​ 140,992 4.0 % ​ 140,992 4.0 % ​ N/A N/A ​ Bank First, N.A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 372,312 11.8 % $ 253,504 8.0 % $ 332,724 10.5 % $ 316,880 10.0 % Tier I capital (to risk-weighted assets) ​ ​ 349,632 11.0 % ​ 190,128 6.0 % ​ 269,348 8.5 % ​ 253,504 8.0 % Common equity tier I capital (to risk-weighted assets) ​ ​ 349,632 11.0 % ​ 142,596 4.5 % ​ 221,816 ​ 7.0 % ​ 205,972 ​ 6.5 % Tier I capital (to average assets) ​ ​ 349,632 9.9 % ​ 140,887 4.0 % ​ 140,887 4.0 % ​ 176,108 5.0 % ​ As previously mentioned, the Company carried $12.0 million of subordinated debt and $4.0 million of junior subordinated debt as of December 31, 2023 and $23.5 million of subordinated debt as of December 31, 2022, which is included in total capital for the Company in the tables above.
For more information, see “Business—Supervision and Regulation—Capital Requirements.” ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital Required ​ ​ Minimum To Be Well- ​ ​ ​ ​ ​ ​ ​ ​ Minimum Capital ​ ​ for Capital Adequacy Plus ​ ​ Capitalized Under prompt ​ ​ ​ ​ ​ ​ ​ ​ Required for Capital ​ ​ Capital Conservation Buffer ​ ​ corrective Action ​ ​ Actual ​ ​ Adequacy ​ ​ Basel III Phase-In Schedule ​ ​ Provisions ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ Amount ​ Ratio ​ ​ (dollars in thousands) At December 31, 2024 ​ ​ ​ ​ ​ Bank First Corporation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 509,763 14.1 % $ 288,325 8.0 % $ 378,427 10.5 % ​ N/A N/A ​ Tier I capital (to risk-weighted assets) ​ ​ 457,749 12.7 % ​ 216,244 6.0 % ​ 306,346 8.5 % ​ N/A N/A ​ Common equity tier I capital (to risk-weighted assets) ​ ​ 457,749 12.7 % ​ 162,183 4.5 % ​ 252,285 7.0 % ​ N/A N/A ​ Tier I capital (to average assets) ​ ​ 457,749 11.0 % ​ 167,134 4.0 % ​ 167,134 4.0 % ​ N/A N/A ​ Bank First, N.A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 438,549 12.2 % $ 288,152 8.0 % $ 378,200 10.5 % $ 360,190 10.0 % Tier I capital (to risk-weighted assets) ​ ​ 398,535 11.1 % ​ 216,114 6.0 % ​ 306,162 8.5 % ​ 288,152 8.0 % Common equity tier I capital (to risk-weighted assets) ​ ​ 398,535 11.1 % ​ 162,086 4.5 % ​ 252,133 ​ 7.0 % ​ 234,124 ​ 6.5 % Tier I capital (to average assets) ​ ​ 398,535 9.5 % ​ 167,019 4.0 % ​ 167,019 4.0 % ​ 208,774 5.0 % At December 31, 2023 ​ ​ ​ ​ ​ ​ Bank First Corporation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 484,398 14.0 % $ 276,904 8.0 % $ 363,437 10.5 % ​ N/A N/A ​ Tier I capital (to risk-weighted assets) ​ ​ 437,979 12.7 % ​ 207,678 6.0 % ​ 294,211 8.5 % ​ N/A N/A ​ Common equity tier I capital (to risk-weighted assets) ​ ​ 433,979 12.5 % ​ 155,759 4.5 % ​ 242,291 7.0 % ​ N/A N/A ​ Tier I capital (to average assets) ​ ​ 437,979 11.1 % ​ 158,581 4.0 % ​ 158,581 4.0 % ​ N/A N/A ​ Bank First, N.A: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total capital (to risk-weighted assets) ​ $ 446,634 12.9 % $ 276,726 8.0 % $ 363,202 10.5 % $ 345,907 10.0 % Tier I capital (to risk-weighted assets) ​ ​ 412,215 11.9 % ​ 207,544 6.0 % ​ 294,021 8.5 % ​ 276,726 8.0 % Common equity tier I capital (to risk-weighted assets) ​ ​ 412,215 11.9 % ​ 155,658 4.5 % ​ 242,135 ​ 7.0 % ​ 224,840 ​ 6.5 % Tier I capital (to average assets) ​ ​ 412,215 10.4 % ​ 158,585 4.0 % ​ 158,585 4.0 % ​ 198,231 5.0 % ​ As previously mentioned, the Company carried $12.0 million of subordinated debt as of December 31, 2024 and 2023, as well as $4.0 million of junior subordinated debt as of December 31, 2023.
This increase was due to a higher interest rate environment driving an increase in average rates paid on interest-bearing deposits, rising from 0.54% during 2022 to 1.84% during 2023, and growth of $398.9 million year-over-year in average interest-bearing deposits. Provision for Credit Losses. Credit risk is inherent in the business of making loans.
This increase was due to a higher interest rate environment driving an increase in average rates paid on interest-bearing deposits, rising from 1.84% during 2023 to 2.61% during 2024, and growth of $151.2 million year-over-year in average interest-bearing deposits.
Commercial and Industrial (C&I). Our C&I portfolio totaled $487.9 million and $492.5 million at December 31, 2023 and 2022, respectively, and represented 15% and 17% of our total loans, respectively. C&I loans decreased 0.9% during 2023, as a result of exiting a few nonperforming borrowers and borrowers from acquired institutions that did not fit the Bank ’ s lending philosophy.
C&I loans decreased 0.9% during 2023 as a result of exiting a few nonperforming borrowers and borrowers from acquired institutions that did not fit the Bank ’ s lending philosophy. Commercial Real Estate (CRE).
These acquisitions also resulted in several former bank branches of those institutions becoming other real estate owned, leading to the significant losses on sales and valuations of these buildings during 2023.The major components of our noninterest expense are listed in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ December 31, ​ ​ ​ 2023 ​ 2022 (In thousands) ​ ​ ​ ​ ​ ​ Noninterest Expense ​ ​ ​ Salaries, commissions, and employee benefits ​ ​ $ 40,355 ​ $ 33,155 Occupancy ​ ​ ​ 5,670 ​ ​ 5,467 Data processing ​ ​ 8,011 ​ 6,324 Postage, stationary, and supplies ​ ​ 1,084 ​ 771 Advertising ​ ​ 326 ​ 271 Charitable contributions ​ ​ 944 ​ ​ 718 Outside service fees ​ ​ 6,350 ​ 6,727 Net loss (gain) on sales and valuations of other real estate owned ​ ​ 2,133 ​ (146) Net loss on sales of securities ​ ​ 7,901 ​ — Amortization of intangibles ​ ​ 6,324 ​ 2,318 Other ​ ​ 9,021 ​ 6,348 Total noninterest expenses ​ ​ $ 88,119 ​ $ 61,953 ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Tax Expense.
The major components of our noninterest expense are listed in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 (In thousands) ​ ​ ​ ​ ​ ​ Noninterest Expense ​ ​ ​ Salaries, commissions, and employee benefits ​ ​ $ 40,901 ​ $ 40,355 Occupancy ​ ​ ​ 5,957 ​ ​ 5,670 Data processing ​ ​ 9,692 ​ 8,011 Postage, stationary, and supplies ​ ​ 885 ​ 1,084 Net loss (gain) on sales and valuations of other real estate owned ​ ​ (694) ​ 2,133 Net loss on sales of securities ​ ​ 34 ​ 7,901 Advertising ​ ​ 313 ​ 326 Charitable contributions ​ ​ 793 ​ ​ 944 Federal deposit insurance ​ ​ ​ 1,850 ​ ​ 1,831 Outside service fees ​ ​ 4,560 ​ 4,519 Amortization of intangibles ​ ​ 5,793 ​ 6,324 Other ​ ​ 8,683 ​ 9,021 Total noninterest expenses ​ ​ $ 78,767 ​ $ 88,119 ​ ​ ​ ​ ​ ​ ​ ​ ​ Income Tax Expense.
Securities classified as held to maturity consist of U.S. Treasury securities and obligations of states and political subdivisions. These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost. Securities held to maturity as of December 31, 2023 and 2022, are carried at their amortized cost of $103.3 million and $45.1 million, respectively.
These securities, which management has the intent and ability to hold to maturity, are reported at amortized cost of $110.8 million and $103.3 million as of December 31, 2024 and 2023, respectively.
Treasury securities ​ $ 16,816 3.4 % $ 60,714 3.6 % $ 21,643 4.7 % $ — — ​ $ 99,173 3.8 % Obligations of states and political subdivisions ​ ​ 956 2.7 % ​ 2,324 2.5 % ​ 871 3.0 % ​ — — % ​ 4,151 ​ 2.6 % Total held to maturity securities ​ $ 17,772 ​ 3.4 % $ 63,038 ​ 3.6 % $ 22,514 4.6 % $ — — % $ 103,324 ​ 3.8 % Total ​ $ 27,816 3.3 % $ 87,979 3.8 % $ 74,165 3.7 % $ 67,682 2.9 % $ 257,642 3.5 % ​ 61 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ After One, But ​ After Five, But ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Within One Year ​ Within Five Years ​ Within Ten Years ​ After Ten Years ​ Total ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average ​ Amortized ​ Average At December 31, 2022 Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) Cost Yield (1) ​ (dollars in thousands) ​ Available for sale securities ​ ​ ​ ​ ​ ​ U.S.
Treasury securities $ 16,816 3.4 % $ 60,714 3.6 % $ 21,643 4.7 % $ — — % ​ 99,173 3.8 % Obligations of states and political subdivisions ​ ​ 956 2.7 % ​ 2,324 2.5 % ​ 871 3.0 % ​ — — % ​ 4,151 ​ 2.6 % Total held to maturity securities ​ $ 17,772 ​ 3.4 % $ 63,038 ​ 3.6 % $ 22,514 4.6 % $ — — % $ 103,324 ​ 3.8 % Total ​ $ 27,816 3.3 % $ 87,979 3.8 % $ 74,165 3.7 % $ 67,682 2.9 % $ 257,642 3.5 % (1) Weighted Average Yield is shown on a fully taxable equivalent basis using a federal tax rate of 21%.
Cash and cash equivalents increased by $128.1 million, or 107.3%, to $247.5 million at December 31, 2023 from $119.4 million at December 31, 2022. Investment Securities. The carrying value of total investment securities decreased by $104.2 million to $245.5 million at December 31, 2023 from $349.7 million at December 31, 2022.
Cash and cash equivalents increased by $13.8 million, or 5.6%, to $261.3 million at December 31, 2024 from $247.5 million at December 31, 2023. Investment Securities. The carrying value of total investment securities increased by $88.3 million to $333.8 million at December 31, 2024 from $245.5 million at December 31, 2023.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK We are party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments primarily include commitments to originate and sell loans, standby and direct pay letters of credit, unused lines of credit and unadvanced portions of construction and development loans.
These financial instruments primarily include commitments to originate and sell loans, standby and direct pay letters of credit, unused lines of credit and unadvanced portions of construction and development loans. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheet.
We establish an allowance for credit losses through charges to earnings, which are shown in the statements of income as the provision for credit losses. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance.
We establish an allowance for credit losses through charges to earnings, which are shown in the statements of income as the provision for credit losses. When reductions in the allowance for credit losses are deemed appropriate, a negative provision for credit losses may be necessary.
As of December 31, 2023, the Company had total consolidated assets of $4.22 billion, total loans of $3.34 billion, total deposits of $3.43 billion and total stockholders’ equity of $619.8 million. The Company employs approximately 379 full-time equivalent employees and has an assets-to-FTE ratio of approximately $11.1 million. For more information, see the Company’s website at www.bankfirst.com.
As of December 31, 2024, the Company had total consolidated assets of $4.50 billion, total loans of $3.52 billion, total deposits of $3.66 billion and total stockholders’ equity of $639.7 million. The Company employs approximately 366 full-time equivalent employees (“FTE”) and has an assets-to-FTE ratio of approximately $11.5 million.
Our residential 1-4 family loan portfolio totaled $888.6 million and $739.5 million at December 31, 2023 and 2022, respectively, and represented 27% and 25% of our total loans, respectively. Residential 1-4 family loans increased 20.2% during 2023, primarily as a result of loans acquired from Hometown during 2023.
Our residential 1-4 family loan portfolio totaled $913.2 million and $888.6 million at December 31, 2024 and 2023, respectively, and represented 26% and 27% of our total loans, respectively. Residential 1-4 family loans increased 2.8% during 2024, driven by natural growth in our markets.
C&D loans increased 0.6% during 2023, as a result of management making a strategic decision to limit growth in this area. C&D loans increased 50.8% during 2022, primarily as a result of loans acquired from Denmark during 2022. Residential 1-4 Family.
C&D loans increased 38.4% during 2024, as a result of a few large multi-family related projects for existing customers with experience in this industry. C&D loans increased 0.6% during 2023, as a result of management making a strategic decision to limit growth in this area. 51 Table of Contents Residential 1-4 Family.
Much of the loans made by the Bank are secured by real estate collateral.
The Bank makes commercial and industrial loans, commercial real estate loans, construction and development loans, residential real estate loans, and a variety of consumer loans and other loans. Much of the loans made by the Bank are secured by real estate collateral.
The fair value of securities available for sale totaled $142.2 million and included gross unrealized gains of $86,000 and gross unrealized losses of $12.2 million at December 31, 2023. At December 31, 2022, the fair value of securities available for sale totaled $304.6 million and included gross unrealized gains of $0.5 million and gross unrealized losses of $21.8 million.
At December 31, 2023, the fair value of securities available for sale totaled $142.2 million and included gross unrealized gains of $0.1 million and gross unrealized losses of $12.2 million. Securities classified as held to maturity consist of U.S. Treasury securities and obligations of states and political subdivisions.
Net loans increased by $428.1 million, or 14.9%, to $3.30 billion at December 31, 2023 from $2.87 billion at December 31, 2022. 50 Table of Contents Bank-Owned Life Insurance. At December 31, 2023, our investment in bank-owned life insurance was $61.3 million, an increase of $15.2 million from $46.1 million at December 31, 2022. Deposits.
At December 31, 2024, our investment in bank-owned life insurance was $61.5 million, an increase of $0.2 million from $61.3 million at December 31, 2023. Deposits. Deposits increased $228.2 million, or 6.7%, to $3.66 billion at December 31, 2024 from $3.43 billion at December 31, 2023.
Recent acquisitions Hometown Bancorp, Ltd. On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd.
For more information, see the Company’s website at www.bankfirst.com. ​ 43 Table of Contents Recent acquisitions Hometown Bancorp, Ltd. On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−0 removed18 unchanged
Biggest changeAccordingly, the Company’s interest rate risk measurement philosophy focuses on maintaining an appropriate balance between theoretical and practical scenarios; especially given the primary objective of the Company’s overall asset/liability management process is to facilitate meaningful strategy development and implementation. 65 Table of Contents Therefore, we model a set of interest rate scenarios capturing the financial effects of a range of plausible rate scenarios; the collective impact of which will enable the Company to clearly understand the nature and extent of its sensitivity to interest rate changes.
Biggest changeAccordingly, the Company’s interest rate risk measurement philosophy focuses on maintaining an appropriate balance between theoretical and practical scenarios; especially given the primary objective of the Company’s overall asset/liability management process is to facilitate meaningful strategy development and implementation.
The following table demonstrates, as of December 31, 2023, the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or “shock,” in the yield curve and subjective adjustments in deposit pricing might have on the Company’s projected net interest income over the next 12 months.
The following table demonstrates, as of December 31, 2024, the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or “shock,” in the yield curve and subjective adjustments in deposit pricing might have on the Company’s projected net interest income over the next 12 months.
Treasuries and LIBOR (basis risk). An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.
Treasuries. An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.
The changes to net interest income shown below are in compliance with the Company’s policy guidelines. ​ ​ ​ ​ Change in Interest Rates Percentage Change in (in Basis Points) Net Interest Income +400 0.1% +300 0.1% +200 0.1% +100 0.2% -100 (0.1)% ​ ​ Economic Value of Equity Analysis.
The changes to net interest income shown below are in compliance with the Company’s policy guidelines. ​ ​ ​ ​ Change in Interest Rates Percentage Change in (in Basis Points) Net Interest Income +300 (4.5)% +200 (3.0)% +100 (1.5)% -100 (1.3)% -200 (2.1)% -300 ​ (2.1)% ​ Economic Value of Equity Analysis.
At the same date, our analysis estimated that, in the event of an instantaneous 100 basis point decrease in interest rates, the Company would experience 2.10% decrease in the economic value of equity.
At the same date, our analysis estimated that, in the event of an instantaneous 100 basis point decrease in interest rates, the Company would experience 3.23% decrease in the economic value of equity.
The Company’s economic value of equity analysis as of December 31, 2023 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Company would experience a 4.05% increase in the economic value of equity.
The Company’s economic value of equity analysis as of December 31, 2024 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Company would experience a 3.00% increase in the economic value of equity.
Added
Therefore, we model a set of interest rate scenarios capturing the financial effects of a range of plausible rate scenarios; the collective impact of which will enable the Company to clearly understand the nature and extent of its sensitivity to interest 65 Table of Contents rate changes.

Other BFC 10-K year-over-year comparisons