BFC — Q2 2026 Financial Report Analysis

Bank First's Q2 2026: a bigger bank after the Centre deal, with a wider margin but loans that aren't growing on their own

Bank First Corporation, a Wisconsin community bank, earned $24.7 million, or $2.21 per share, in the second quarter of 2026. A year earlier it earned $16.9 million, or $1.71 per share. Most of the jump comes from size: on January 1, 2026 it bought Centre 1 Bancorp, which brought $1.48 billion of assets and made the bank about a third larger. The parts that tell you about Bank First's own business point different ways. The margin it earns on lending improved even after stripping out accounting effects from the deal. But loan balances have shrunk slightly since the acquisition, as the bank lets go of Centre loans it doesn't want to keep. Bad loans are higher than a year ago but still small.

At a glance

• Net interest margin 4.13%, up from 3.72%. This is what the bank earns on its loans and securities after paying depositors, as a share of its interest-earning assets. About 0.27 points of it is a one-time accounting boost from the acquisition. Without that boost the margin still rose, from about 3.65% to 3.86%.
• Earnings per share up 29%, net income up 46%. Per-share growth trails profit growth because Bank First paid for Centre partly in new shares, so the average share count was 12.6% higher (11.15 million vs 9.90 million).
• Loans of $4.52 billion, up $917 million since December, against $981.5 million acquired from Centre. Without the deal, the loan book would have shrunk by roughly $65 million (about 1.4%) in the first half.

Key figures

Six-month totals: net income was $44.7 million versus $35.1 million, and EPS was $3.99 versus $3.53 (+13.0%). The first quarter carried $6.5 million of acquisition costs, which held the half-year growth rate down.

Where the earnings came from

The margin rose, and not only because of deal accounting. When a bank buys another bank, it marks the acquired loans and deposits to market value. That discount is then booked back into interest income over time. This is "purchase accounting accretion." It is real income under the accounting rules, but it shrinks as the acquired loans pay off. In Q2 it added $3.5 million to net interest income, worth $0.25 per share after tax and 0.27 points of margin. That compares with $0.6 million and 0.07 points a year earlier. The underlying improvement shows up on the funding side. The average rate paid on interest-bearing deposits fell to 2.21% from 2.48%. Certificates of deposit repriced from 3.83% to 3.40%, and money-market accounts from 2.42% to 2.13%. Meanwhile, the yield on taxable loans rose to 6.01% from 5.68%. From Q1 to Q2 alone, management says the margin excluding accretion rose 10 basis points: asset yields went up 4bp and funding costs fell 9bp. (A basis point is 0.01 percentage point.)

Cheap deposits make up a bigger share of funding. Noninterest-bearing demand deposits are checking balances the bank pays nothing on. They were 30.0% of total deposits at June 30, up from 27.1% at year-end. That is a large part of why funding costs fell.

Fee income doubled, mostly because Centre came with fee businesses. Trust and wealth management produced $1.6 million. Before the deal Bank First had almost none of this business ($16,000 in Q2 2025). Service charges rose to $4.1 million from $2.1 million. Two lines moved against the trend:

• Income from Ansay & Associates, the insurance agency Bank First partly owns, fell to $0.87 million from $1.15 million. Management cites Ansay's spending on automation and a softening insurance pricing market.
• A $0.5 million gain on the value of mortgage servicing rights helped the quarter. That gain comes from rising mortgage rates, not from the bank doing more business, and it can reverse.

Costs are still inflated by the merger. Noninterest expense was $34.4 million, including $3.3 million of acquisition-related costs. That is down from $6.5 million in Q1, when most of the severance-type personnel charges landed. Centre's core banking system was converted onto Bank First's platform during Q2. Management says some duplicate staff, occupancy and data-processing costs remained until then, and that "full realization of expected cost savings" will come in later quarters. Amortization of the new $31.9 million core-deposit intangible doubled intangible amortization to $2.5 million a quarter. This is a non-cash charge for the value of the acquired customer deposits, spread over 10 years.

Bank First doesn't publish an efficiency ratio (expenses as a share of revenue; lower is better). Our calculation from its figures puts it at 52.9% for Q2, versus 49.9% a year earlier. Excluding the $3.3 million of acquisition costs it would be about 47.8%. Watch this number as the cost savings come through.

Credit: higher problem loans, no new reserves

Bank First booked no provision for credit losses in Q1 or Q2 2026. A provision is money set aside for expected loan losses. Management's explanation is that the loan book shrank slightly once Centre loans are excluded. The acquisition itself added $12.8 million to the reserve on January 1. Charge-offs (loans written off as uncollectable) picked up to an annualized 0.09% of average loans in Q2, from 0.01% in Q1. The reserve fell by about $1.0 million during the quarter, to $56.0 million, which is roughly the amount charged off. Reserves still equal 1.24% of loans, the same as a year ago.

Nonperforming assets (loans not being repaid as agreed, plus foreclosed property) were $27.8 million, or 0.47% of assets. That is down from 0.50% at March 31 but up from 0.31% a year ago. Of the $22.3 million in nonaccrual loans, 75% sits with three borrowers, which management calls "unique and not prevalent throughout the Bank's loan portfolio." The $2.4 million of foreclosed real estate is all former Centre property. These levels are low for a commercial bank. Because so much of the total sits with three borrowers, though, a single resolution, good or bad, will move the ratio.

What the headline numbers hide

• Cash flow lagged reported profit. For the first half, operating cash flow was $12.8 million against net income of $44.7 million. Two items explain most of the gap: a $34.2 million drop in other liabilities, and $6.3 million of purchase accounting accretion, which is booked as income without cash arriving in the period. Operating cash flow says less about a bank than about an industrial company, and the liabilities drop is consistent with paying off acquisition-related accruals. Still, under a third of reported net income (29%) turned into operating cash this half.
• GAAP vs adjusted. Adjusted net income ($27.3 million, $2.45/share) excludes $3.3 million of pre-tax acquisition expenses and a $28,000 gain on foreclosed property. Both adjusted and GAAP figures still include the $0.25/share accretion benefit. Remove both the deal costs and the accretion and EPS would be about $2.20. The comparable year-ago figure is about $1.64 ($1.69 adjusted minus $0.05 accretion), so the underlying increase is roughly 34%.
• Share issuance cut into per-share growth. EPS didn't benefit from buybacks: the average share count rose 12.6% because the Centre purchase was paid partly in stock. Bank First did buy back 160,000 shares for $22.7 million in the first half, including 144,000 in Q2. That trimmed the dilution but didn't reverse it.
• Tax was a small headwind, not a tailwind. The effective tax rate rose to 19.4% from 18.3%. Q2 2025 had included a tax-free life insurance death benefit.
• Most loan growth was bought, not earned. As noted above, loans would have shrunk without the deal. Management says the runoff is concentrated in the new Stateline region (formerly Centre), "as the Bank transitioned out of certain loans that were not consistent with Bank First's lending philosophy." That is a deliberate choice, but it means the balance sheet isn't currently growing on its own.
• Capital is thinner after the deal. The holding company's CET1 ratio was 11.2% at June 30, down from 12.3% at year-end. CET1 is the core capital regulators measure against risk-weighted assets, and 7.0% is the level that includes the conservation buffer. Tangible common equity was 9.38% of tangible assets, down from 10.04% a year earlier. Both remain well above regulatory minimums. Tangible book value per share rose to $47.92 from $46.01 at year-end, so the Centre deal didn't dilute it by the end of the half.

Takeaway: Two things in this quarter will shrink: about $0.25 a share of acquisition accretion, and $3.3 million of merger costs. What looks set to last is the cheaper funding: deposit costs down 27bp from a year ago and 30% of deposits paying no interest. The margin excluding accretion rose to about 3.86%. The open question is the loan book, which has shrunk about 1.4% since January once acquired loans are excluded. More cost savings and a falling accretion contribution will offset each other, so loan growth is what decides whether earnings per share keep rising from here.

What's next

• Another acquisition is already signed. On May 19, 2026, Bank First agreed to buy PSB Holdings, the parent of Peoples State Bank in Wausau, Wisconsin, for all stock. The 10-Q says the deal is expected to close on December 4, 2026, subject to approval by Peoples shareholders. (The July earnings release says "December 2025", which appears to be a typo; we use the 10-Q's date.) On June 30 figures, the combined bank would have about $7.5 billion of assets, $5.6 billion of loans and $6.2 billion of deposits. Because the deal is paid in stock, expect another jump in the share count, another round of merger costs and a new core-deposit intangible in Q4 2026 and early 2027.
• The $10 billion line. CEO Mike Molepske said the bank "will not compromise our acquisition standards simply to reach a regulatory threshold." Banks above $10 billion of assets face stricter oversight and a cap on debit-card interchange fees. At $7.5 billion after Peoples, Bank First is still well short of that line.
• Dividend. The board raised the quarterly dividend to $0.60 per share, up 9.1% from the prior quarter and 33.3% from a year ago. It is payable October 7, 2026.
• Our read. Management gives no numeric earnings guidance. In Q3, check four things. Does the margin hold near 4.1% as accretion starts to shrink? Does expense fall below $34 million once conversion duplicates are gone? Do loan balances stop shrinking? Do the three large nonaccrual relationships resolve without a provision? Based on its last two release dates (April 16 and July 21), the Q3 report should arrive around the third week of October.