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BFC Nasdaq· Bank First Corp
Earnings report Q3 2023

BFC Reports Strong Revenue Growth in Latest Quarter

Segments of revenue

BFC's revenue in the latest quarter was primarily driven by two segments: loans and noninterest income. Net interest income, which is the largest component of the company's total revenue, increased significantly due to the added scale of operations resulting from the acquisition of Hometown during the first quarter of 2023. Additionally, noninterest income, which includes service charges, income from unconsolidated subsidiaries, loan servicing fees, and gains on sales of mortgage loans, also contributed to the company's revenue growth.

Strengths

BFC demonstrated strong revenue growth in the latest quarter, with total interest income increasing by $16.2 million, or 52.9%, compared to the same period in the previous year. This increase was primarily driven by the acquisition of Hometown and the resulting increase in interest-earning assets. Net interest income also improved, with the net interest margin increasing by 0.08% to 3.71% compared to the same period in the previous year. The company's management closely monitors interest income and expense to maximize net interest income without exposing the company to excessive interest rate risk.

Challenges

While BFC reported strong revenue growth, there were some challenges in the latest quarter. The company recorded net recoveries of $0.1 million for the nine months ended September 30, 2023, compared to net recoveries of $1.0 million for the same period in the previous year. This decrease in net recoveries indicates a potential increase in credit risk. Additionally, the company's ACL coverage increased from 0.81% of total loans at September 30, 2022, to 1.29% of total loans at September 30, 2023, as a result of CECL implementation. This suggests a higher provision for potential loan losses, which could impact the company's profitability.

Noteworthy

The acquisition of Hometown during the first quarter of 2023 significantly contributed to BFC's revenue growth in the latest quarter. The company utilized the proceeds from maturities and sales of securities to fund loan growth and compensate for declining deposit balances. The increase in net loans by $440.8 million, totaling $3.31 billion at September 30, 2023, compared to $2.87 billion at December 31, 2022, further supported the company's revenue growth.

Summary

BFC reported strong revenue growth in the latest quarter, driven by increased net interest income and noninterest income. The acquisition of Hometown and the resulting increase in interest-earning assets played a significant role in the company's revenue growth. However, there were some challenges, including a decrease in net recoveries and an increase in the ACL coverage. Overall, BFC's financial performance in the latest quarter was positive, demonstrating the company's ability to generate revenue and manage interest income and expense effectively.

Source documents

Form 10-Q  filed on Nov 09, 2023
16 pages scanned

Reference data

Company financials Q3 revenue 67M
Analyst estimates Q3 EPS beat by 2.13%
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