Bank First's Strategic Merger with Centre 1: A High-Conviction Play in Relationship-Based Banking

In the ever-evolving landscape of regional banking, the $174.3 million all-stock acquisition of Centre 1 Bancorp by Bank First Corporation (NASDAQ: BFC) stands out as a masterclass in strategic consolidation. This merger, set to close in Q1 2026, is not merely a transaction but a calculated move to fortify Bank First's position in a sector increasingly defined by the need for scale, stability, and customer-centric innovation. For investors, the deal offers a compelling case for long-term value creation through enhanced deposit stability, geographic diversification, and cross-selling synergies.

Deposit Stability: A Foundation of Low-Cost Funding

One of the most striking features of this merger is the combined entity's robust deposit base. Both institutions maintain over 25% of their deposits in non-interest-bearing checking accounts, a figure that dwarfs the industry average of under 20%. This is a critical differentiator in an era where funding costs are a make-or-break factor for profitability. Non-interest-bearing deposits are not only cost-effective but also indicative of deep-rooted customer relationships, which are harder to replicate than mere transactional accounts.

By merging, Bank First and Centre 1 create a deposit franchise with $4.89 billion in total deposits, 25% of which are low-cost. This stability reduces reliance on volatile wholesale funding and insulates the combined institution from interest rate volatility. For context, consider the collapse of Silicon Valley Bank in 2023, where a lack of stable, relationship-based deposits exacerbated liquidity crises. Bank First's approach is a defensive play that prioritizes resilience—a quality investors should value in an unpredictable macroeconomic climate.

Geographic Diversification: Expanding Without Overlap

Bank First's foray into southern Wisconsin and northern Illinois marks its first out-of-state expansion, a move that is both bold and prudent. The combined entity will operate in 12 new counties, adding $1.55 billion in assets and $994.9 million in loans to its balance sheet. Crucially, these new markets align with Bank First's existing footprint in Indiana and Illinois, creating a contiguous geographic presence that avoids cannibalization while tapping into high-potential, relationship-driven communities.

This strategy mirrors successful regional consolidators like UMB Financial Corp., which acquired Heartland Financial USA in 2024 to expand its Midwestern footprint. Unlike national banks that dilute local market expertise, Bank First and Centre 1 are doubling down on community banking. Steve Eldred, Centre's CEO, will join Bank First's board, ensuring that the merged entity retains the leadership insights and community connections that define its two predecessors. This preservation of local trust is a rare but invaluable asset in an age where digital banking often erodes personal relationships.

Cross-Selling Synergies: Unlocking Revenue Streams

The merger's true value lies in its ability to create a one-stop financial ecosystem. Bank First customers will gain access to Centre's wealth management services, while Centre's clients will benefit from Bank First's 40% ownership in Ansay & Associates, an insurance agency. These cross-selling opportunities are not hypothetical—they are embedded in the deal's structure.

For example, Ansay's integrated insurance and risk management solutions could generate recurring revenue for the combined entity, diversifying income beyond traditional lending. Similarly, Centre's wealth management division could attract high-net-worth individuals from Bank First's existing customer base, creating a feedback loop of value creation. The all-stock deal structure further aligns incentives, as it ties Centre shareholders' returns to the long-term performance of the merged entity.

A High-Conviction Play in a Consolidating Sector

The Bank First-Centre 1 merger is emblematic of broader trends in regional banking. From 2024 to 2025, the sector saw a tripling of M&A activity, with deals like SouthState's $2 billion acquisition of Independent Bank Group underscoring the shift toward consolidation. These transactions are driven by the need for economies of scale, regulatory compliance, and digital transformation—all of which Bank First addresses through its measured integration timeline and focus on IT alignment.

For investors, the key question is whether this merger can outperform peers. The answer lies in three pillars:
1. Cost Efficiency: The combined entity's asset base of $5.91 billion will allow it to spread fixed costs more effectively, improving net interest margins.
2. Customer Retention: The emphasis on non-interest-bearing deposits and local leadership reduces churn, a critical factor in an era where fintech competitors are siphoning customers.
3. Strategic Patience: By delaying system conversion until Q2 2026, Bank First avoids the operational risks that often derail mergers, ensuring a smoother transition.

Investment Thesis: Buy and Hold with Confidence

Bank First's stock has historically traded at a premium to its peers due to its strong regional positioning and disciplined growth strategy. Post-merger, the stock's valuation should reflect the combined entity's enhanced scale and profitability. Analysts project that the merger will add $0.25 to $0.35 per share in earnings by 2027, assuming full integration.

For investors with a 5–7 year horizon, this is a high-conviction play. The all-stock structure and leadership continuity mitigate execution risk, while the focus on relationship-based banking aligns with long-term industry trends. In a sector where many banks are struggling with digital disruption and regulatory pressures, Bank First's merger with Centre 1 is a rare example of strategic foresight.

In conclusion, the Bank First-Centre 1 merger is not just a transaction—it's a blueprint for sustainable value creation in an increasingly fragmented banking sector. By prioritizing deposit stability, geographic expansion, and cross-selling, the combined entity positions itself as a leader in the new era of relationship-based banking. For investors seeking a blend of defensive qualities and growth potential, this is a deal worth watching—and betting on.