Bank First Corp Fair Value Disclosure
Note 22 Fair Value of Financial Instruments
Accounting guidance establishes a fair value hierarchy to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.
Level 1: | Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. |
Level 2: | Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
Level 3: | Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
There were no liabilities measured at fair value on a recurring basis. Information regarding the fair value of assets measured at fair value on a recurring basis is as follows (dollar amounts in thousands):
| Instruments | | Markets | | Other | | Significant | |||||
Measured | for Identical | Observable | Unobservable | |||||||||
At Fair | Assets | Inputs | Inputs | |||||||||
Value | (Level 1) | (Level 2) | (Level 3) | |||||||||
December 31, 2025 |
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Assets |
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| |
| |
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Securities available for sale |
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| |
|
| | |||||
Obligations of U.S. Government sponsored agencies | $ | 21,279 | $ | — | $ | 21,279 | $ | — | ||||
Obligations of states and political subdivisions |
| 57,419 |
| — |
| 57,419 |
| — | ||||
Mortgage-backed securities | 70,756 | — | 70,756 | — | ||||||||
Corporate notes |
| 14,968 |
| — |
| 14,968 |
| — | ||||
Mortgage servicing rights |
| 13,650 |
| — |
| 13,650 |
| — | ||||
December 31, 2024 |
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| |
| |
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Assets |
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| |
| |
| | ||||
Securities available for sale | ||||||||||||
U.S. Treasury securities | $ | 99,656 | $ | 99,656 | $ | — | $ | — | ||||
Obligations of U.S. Government sponsored agencies | 24,741 | — | 24,741 | — | ||||||||
Obligations of states and political subdivisions |
| 56,357 |
| — |
| 56,357 |
| — | ||||
Mortgage-backed securities | 27,993 | — | 27,993 | — | ||||||||
Corporate notes |
| 14,314 |
| — |
| 14,314 |
| — | ||||
Mortgage servicing rights |
| 13,369 |
| — |
| 13,369 |
| — | ||||
There were no assets measured on a recurring basis using significant unobservable inputs (Level 3) during these periods.
Information regarding the fair value of assets measured at fair value on a non-recurring basis is as follows (dollar amounts in thousands):
| | Quoted Prices | | | ||||||||
In Active | Significant | |||||||||||
Assets | Markets | Other | Significant | |||||||||
Measured | for Identical | Observable | Unobservable | |||||||||
At Fair | Assets | Inputs | Inputs | |||||||||
Value | (Level 1) | (Level 2) | (Level 3) | |||||||||
December 31, 2025 |
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Loans individually evaluated, net of reserve | $ | 1,743 | $ | — | $ | — | $ | 1,743 | ||||
December 31, 2024 |
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| |
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OREO | $ | 741 | $ | — | $ | — | $ | 741 | ||||
Loans individually evaluated, net of reserve |
| 6,194 |
| — |
| — |
| 6,194 | ||||
$ | 6,935 | $ | — | $ | — | $ | 6,935 | |||||
The following is a description of the valuation methodologies used by the Company for the items noted in the table above, including the general classification of such instruments in the fair value hierarchy. For individually evaluated impaired loans, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate, the estimated fair value of the underlying collateral for collateral-dependent loans, or the estimated liquidity of the note. For OREO, the fair value is based upon the estimated fair value of the underlying collateral adjusted for the expected costs to sell. The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets:
| | | | Weighted |
| ||||
Unobservable | Range of | Average |
| ||||||
Valuation Technique | Inputs | Discounts |
| Discount | |||||
As of December 31, 2025 |
| |
| |
| |
| | |
Loans individually evaluated |
| Third party appraisals and discounted cash flows |
| Collateral discounts and discount rates |
| 0% - 99 | % | 33 | % |
As of December 31, 2024 |
| |
| |
| |
| | |
OREO |
| Third party appraisals, sales contracts or brokered price options |
| Collateral discounts and estimated costs to sell |
| 0 | % | 0 | % |
Loans individually evaluated |
| Third party appraisals and discounted cash flows |
| Collateral discounts and discount rates |
| 0% - 100 | % | 28 | % |
The carrying value and estimated fair value of financial instruments at December 31 follows (dollar amounts in thousands):
Carrying | |||||||||||||||
December 31, 2025 | | amount | | Level 1 | | Level 2 | | Level 3 | | Total | |||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 243,207 | $ | 243,207 | $ | — | $ | — | $ | 243,207 | |||||
Securities held to maturity |
| 103,726 |
| 102,751 |
| 2,395 |
| — |
| 105,146 | |||||
Loans held for sale |
| 6,243 |
| — |
| 6,243 |
| — |
| 6,243 | |||||
Loans, net |
| 3,560,277 |
| — |
| — |
| 3,447,489 |
| 3,447,489 | |||||
Other investments |
| 23,613 |
| — |
| — |
| 23,613 |
| 23,613 | |||||
Financial liabilities: |
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|
|
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Deposits | $ | 3,695,787 | $ | — | $ | — | $ | 3,466,151 | $ | 3,466,151 | |||||
Notes payable | 109,966 | — | 109,966 | — | 109,966 | ||||||||||
Subordinated notes |
| 12,000 | — | 12,000 | — | 12,000 | |||||||||
| Carrying | | | | | ||||||||||
December 31, 2024 | amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||
Financial assets: | |||||||||||||||
Cash and cash equivalents | $ | 261,332 | $ | 261,332 | $ | — | $ | — | $ | 261,332 | |||||
Securities held to maturity |
| 110,756 |
| 106,229 |
| 3,195 |
| — |
| 109,424 | |||||
Loans held for sale |
| 3,088 |
| — |
| 3,088 |
| — |
| 3,088 | |||||
Loans, net |
| 3,473,017 |
| — |
| — |
| 3,285,498 |
| 3,285,498 | |||||
Other investments |
| 22,643 |
| — |
| — |
| 22,643 |
| 22,643 | |||||
Financial liabilities: |
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|
|
|
|
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Deposits | $ | 3,661,073 | $ | — | $ | — | $ | 3,388,650 | $ | 3,388,650 | |||||
Notes payable |
| 135,372 | — | 135,372 | — | 135,372 | |||||||||
Subordinated notes |
| 12,000 | — | 12,000 | — | 12,000 | |||||||||
The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.
Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts nor is it recorded as an intangible asset on the consolidated balance sheet. Significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 12, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 26, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.