Bank First (BFC) risk factors, FY2024 10-K

Risks related to our business

1. 01Difficult or volatile conditions in the national financial markets, and the U.S. economy generally, may adversely affect our lending activity or other businesses, as well as our financial condition
2. 02Changes in interest rates may have an adverse effect on our net interest income
3. 03Changes in interest rates may change the value of our mortgage servicing rights portfolio, which may increase the volatility of our earnings
4. 04Inflation could negatively impact our business, our profitability and our stock price
5. 05Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity, and financial results
6. 06The total amount that we pay for funding costs is dependent, in part, on the Bank’s ability to grow and retain its deposits. If the Bank is unable to sufficiently grow and retain its deposits at competitive rates to meet liquidity needs, it may be subject to paying higher funding costs to meet these liquidity needs
7. 07Our provision and allowance for credit losses may not be adequate to cover actual credit losses
8. 08If we do not effectively manage our asset quality and credit risk, we could experience credit losses
9. 09We face strong competition from financial services companies and other companies that offer banking services
10. 10Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses
11. 11Our future success is largely dependent upon our ability to successfully execute our business strategy
12. 12We 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
13. 13The success of our operating model depends on our ability to attract and retain talented bankers and associates in each of our markets
14. 14Acquisitions may disrupt our business and dilute stockholder value, and integrating acquired companies may be more difficult, costly, or time-consuming than we expect
15. 15systems; potential changes in banking or tax laws or regulations that may affect the target company; or risks of impairment to goodwill or litigation risk
16. 16The fair value of our investment securities may decline
17. 17The financial services industry is undergoing rapid technological changes and we may not have the resources to implement new technology to stay current with these changes
18. 18We may not be able to successfully implement current or future information technology system enhancements and operational initiatives, which could adversely affect our business operations and profitability
19. 19We rely extensively on information technology systems to operate our business and an interruption or security breach may disrupt our business operations, result in reputational harm, and have an adverse effect on our operations
20. 20The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact our business
21. 21System 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
22. 22damage 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
23. 23We are subject to certain operational risks, including, but not limited to, client or employee fraud and data processing system failures and errors
24. 24Fraud is an increasing risk for us and for all banks, and as such, we may experience increased losses due to fraud
25. 25If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses and our results of operations could be materially adversely affected
26. 26Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance
27. 27We rely on other companies to provide key components of our business infrastructure
28. 28We may need to raise additional capital in the future
29. 29The 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
30. 30Changes in accounting standards could materially impact our financial statements

Risks related to the business environment and our industry

1. 31The 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
2. 32We are subject to lending concentration risk, which could cause our regulators to restrict our ability to grow
3. 33The Federal Reserve may require us to commit capital resources to support the Bank
4. 34The Company may be subject to more stringent capital requirements
5. 35Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations
6. 36ESG, 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
7. 37Our deposit insurance premiums could be substantially higher in the future, which could have a material adverse effect on our future earnings
8. 38We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties
9. 39We could face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations

Risks related to our common stock

1. 40Applicable 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
2. 41Our securities are not FDIC insured