-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FNi5USh4qqdaAgyCPRiM3Mw5SiV09Jv0TJZgzqUt3tVj+FGMKnSrBB4AwIdhXSZ8 kMkbUd5C4wvMZ5ZfP6b06w== 0000930661-99-002667.txt : 19991117 0000930661-99-002667.hdr.sgml : 19991117 ACCESSION NUMBER: 0000930661-99-002667 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANCFIRST CORP /OK/ CENTRAL INDEX KEY: 0000760498 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 731221379 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14384 FILM NUMBER: 99754173 BUSINESS ADDRESS: STREET 1: 101 N BROADWAY STE 200 CITY: OKLAHOMA CITY STATE: OK ZIP: 73102-8401 BUSINESS PHONE: 4052701000 MAIL ADDRESS: STREET 1: 101 NORTH BROADWAY STREET 2: STE 200 CITY: OKLAHOMA CITY STATE: OK ZIP: 73102-8401 FORMER COMPANY: FORMER CONFORMED NAME: UNITED COMMUNITY CORP DATE OF NAME CHANGE: 19890401 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from__________________ to_________________ Commission File Number 0-14384 BancFirst Corporation (Exact name of registrant as specified in charter) Oklahoma 73-1221379 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 N. Broadway, Suite 200, Oklahoma City, Oklahoma 73102-8401 (Address of principal executive offices) (Zip Code) (405) 270-1086 (Registrant's telephone number, including area code) --------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___. --- As of October 31, 1999 there were 8,166,203 shares of the registrant's Common Stock outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements. BANCFIRST CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands)
September 30, December 31, --------------------------- 1999 1998 1998 ------------ ------------ ------------ ASSETS Cash and due from banks $ 105,006 $ 101,481 $ 132,286 Interest-bearing deposits with banks 189 78 11 Securities (market value: $564,712, $567,316 and $584,650, respectively) 565,438 564,754 582,649 Federal funds sold 63,000 116,596 187,369 Loans: Total loans (net of unearned interest) 1,364,179 1,283,434 1,338,879 Allowance for possible loan losses (20,173) (18,084) (19,659) ------------ ------------ ------------ Loans, net 1,344,006 1,265,350 1,319,220 Premises and equipment, net 49,087 46,611 47,558 Other real estate owned 1,099 1,126 1,057 Intangible assets, net 22,243 23,890 24,095 Accrued interest receivable 20,662 19,846 19,589 Other assets 25,266 19,375 22,049 ------------ ------------ ------------ Total assets $ 2,195,996 $ 2,159,107 $ 2,335,883 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing $ 421,886 $ 376,569 $ 463,391 Interest-bearing 1,524,623 1,490,011 1,561,409 ------------ ------------ ------------ Total deposits 1,946,509 1,866,580 2,024,800 Short-term borrowings 20,284 37,618 54,841 Long-term borrowings 23,566 14,598 12,966 9.65% Capital Securities 25,000 25,000 25,000 Accrued interest payable 8,104 8,459 8,315 Other liabilities 7,905 7,839 8,044 ------------ ------------ ------------ Total liabilities 2,031,368 1,960,094 2,133,966 ------------ ------------ ------------ Commitments and contingent liabilities Stockholders' equity: Common stock, $1.00 par (shares issued: 8,166,203, 9,617,190 and 9,291,929, respectively) 8,166 9,618 9,292 Capital surplus 46,520 44,774 45,148 Retained earnings 110,754 144,399 142,046 Accumulated other comprehensive income (812) 5,176 5,431 Treasury stock, at cost (330,804 shares in 1998) -- (4,954) -- ------------ ------------ ------------ Total stockholders' equity 164,628 199,013 201,917 ------------ ------------ ------------ Total liabilities and stockholders' equity $ 2,195,996 $ 2,159,107 $ 2,335,883 ============ ============ ============
See accompanying notes to consolidated financial statements. 2 BANCFIRST CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 1999 1998 1999 1998 ---------- ---------- ---------- ---------- INTEREST INCOME Loans, including fees $ 30,174 $ 30,609 $ 89,963 $ 91,369 Interest-bearing deposits with banks 7 8 28 12 Securities: Taxable 7,696 8,558 22,834 24,713 Tax-exempt 625 517 1,872 1,665 Federal funds sold 1,163 1,037 4,327 3,219 ---------- ---------- ---------- ---------- Total interest income 39,665 40,729 119,024 120,978 ---------- ---------- ---------- ---------- INTEREST EXPENSE Deposits 15,205 16,058 45,346 47,659 Short-term borrowings 287 447 1,366 1,469 Long-term borrowings 339 227 855 514 9.65% Capital Securities 611 612 1,835 1,838 ---------- ---------- ---------- ---------- Total interest expense 16,442 17,344 49,402 51,480 ---------- ---------- ---------- ---------- Net interest income 23,223 23,385 69,622 69,498 Provision for possible loan losses 418 596 1,823 1,867 ---------- ---------- ---------- ---------- Net interest income after provision for possible loan losses 22,805 22,789 67,799 67,631 ---------- ---------- ---------- ---------- NONINTEREST INCOME Service charges on deposits 4,188 3,561 12,174 10,642 Securities transactions 248 -- 244 12 Other 2,825 2,820 9,301 7,677 ---------- ---------- ---------- ---------- Total noninterest income 7,261 6,381 21,719 18,331 ---------- ---------- ---------- ---------- NONINTEREST EXPENSE Salaries and employee benefits 11,542 12,151 34,360 33,645 Occupancy and fixed assets expense, net 1,371 1,262 3,645 3,537 Depreciation 1,195 1,171 3,599 3,487 Amortization 912 885 2,732 2,463 Data processing services 542 561 1,642 1,670 Net (income) expense from other real estate owned 91 80 130 (63) Other 4,817 4,507 14,626 14,232 ---------- ---------- ---------- ---------- Total noninterest expense 20,470 20,617 60,734 58,971 ---------- ---------- ---------- ---------- Income before taxes 9,596 8,553 28,784 26,991 Income tax expense (3,566) (2,764) (10,664) (9,995) ---------- ---------- ---------- ---------- Net income 6,030 5,789 18,120 16,996 Other comprehensive income, net of tax: Unrealized gains (losses) on securities (1,018) 3,452 (6,243) 3,388 ---------- ---------- ---------- ---------- Comprehensive income $ 5,012 $ 9,241 $ 11,877 $ 20,384 ========== ========== ========== ========== NET INCOME PER COMMON SHARE Basic $ 0.74 $ 0.62 $ 2.06 $ 1.83 ========== ========== ========== ========== Diluted $ 0.73 $ 0.61 $ 2.03 $ 1.78 ========== ========== ========== ==========
See accompanying notes to consolidated financial statements. 3 BANCFIRST CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
Nine Months Ended September 30, --------------------------- 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES $ 22,871 $ 19,177 ------------ ------------ INVESTING ACTIVITIES Net cash and due from banks provided by (used for) acquisitions and divestitures (12,251) 47,514 Purchases of securities: Held for investment (33,370) (24,145) Available for sale (92,136) (131,135) Maturities of securities: Held for investment 50,576 41,373 Available for sale 81,724 59,500 Proceeds from sales of securities: Held for investment 693 525 Available for sale - 5,487 Net (increase) decrease in federal funds sold 124,369 (51,925) Purchases of loans (11,251) (7,677) Proceeds from sales of loans 120,830 111,809 Net other increase in loans (139,851) (115,468) Purchases of premises and equipment (7,504) (5,768) Proceeds from the sale of other real estate owned and repossessed assets 2,210 2,057 Other, net 1,860 1,616 ------------ ------------ Net cash used for investing activities 85,899 (66,237) ------------ ------------ FINANCING ACTIVITIES Net decrease in demand, transaction and savings deposits (52,563) (6,205) Net increase (decrease) in certificates of deposits (10,184) 38,059 Net increase (decrease) in short-term borrowings (34,557) 15,387 Net increase in long-term borrowings 10,600 4,047 Issuance of common stock 1,453 945 Acquisition of common stock (47,027) (664) Cash dividends paid (3,593) (2,897) ------------ ------------ Net cash provided by (used for) financing activities (135,871) 48,672 ------------ ------------ Net increase (decrease) in cash and due from banks (27,101) 1,612 Cash and due from banks at the beginning of the period 132,296 120,227 ------------ ------------ Cash and due from banks at the end of the period $ 105,195 $ 121,839 ============ ============ SUPPLEMENTAL DISCLOSURE Cash paid during the year for interest $ 65,821 $ 47,056 ============ ============ Cash paid during the year for income taxes $ 9,426 $ 10,352 ============ ============
See accompanying notes to consolidated financial statements. 4 BANCFIRST CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands, except per share data) (1) GENERAL The accompanying consolidated financial statements include the accounts of BancFirst Corporation, BFC Capital Trust I, BancFirst and its subsidiaries BancFirst Investment Corporation, Lenders Collection Corporation and Express Financial Corporation (formerly National Express Corporation). All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the consolidated financial statements. The unaudited interim financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 1998, the date of the most recent annual report. Certain amounts in the 1998 financial statements have been reclassified to conform to the 1999 presentation. As discussed in note (2), the Company completed mergers with Lawton Security Bancshares, Inc. ("Lawton Security Bancshares") in May 1998, and AmQuest Financial Corp ("AmQuest") in October 1998. The mergers were accounted for as a poolings of interests. Accordingly, the consolidated financial information for periods prior to the mergers has been restated to combine the consolidated accounts of Lawton Security Bancshares and AmQuest with the consolidated accounts of the Company for all periods presented. The preparation of financial statements in conformity with generally accepted accounting principles inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. Such estimates and assumptions may change over time and actual amounts may differ from those reported. (2) RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board (the "FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those financial instruments at fair value. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative and its resulting designation. In June 1999, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133 - an amendment of FASB Statement No. 133." This Statement defers the effective date of FASB Statement No. 133 to all fiscal quarters of fiscal years beginning after June 15, 2000. The Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. In October 1998, the FASB issued Statement of Financial Accounting Standards No. 134, "Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise." This Statement amends Statement of Financial Accounting Standards No. 65, "Accounting for Certain Mortgage Banking Activities" to require that after the securitization of Mortgage loans held for sale, an entity engaged in mortgage banking activities classify the resulting mortgage-backed securities or other retained interests based on its ability and intent to sell or hold those investments. The Statement is effective for the first fiscal quarter beginning after December 15, 1998. The Company does not engage in securitization activities. Consequently, the Company does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. 5 (3) MERGERS, ACQUISITIONS AND DISPOSALS In March 1998, BancFirst completed the purchase of 13 branches from NationsBank, N.A. and concurrently sold three of the branches to another Oklahoma financial institution. The purchase and sale resulted in BancFirst purchasing loans and other assets of approximately $32,800, assuming deposits of approximately $132,100 and paying a premium on deposits of approximately $9,100. The transaction was accounted for as a purchase. Accordingly, the effects of the purchase are included in the Company's consolidated financial statements from the date of the purchase forward. BancFirst subsequently sold an additional four of the branches during 1998. These branches had loans and other assets of approximately $2,500, and deposits of approximately $54,000. These transactions did not have a material effect on the results of operations of the Company for 1998. In May 1998, the Company completed a merger with Lawton Security Bancshares, Inc., which had approximately $92,000 in total assets. The merger was effected through the exchange of 414,790 shares of BancFirst Corporation common stock for all of the Lawton Security Bancshares common stock outstanding, and was accounted for as a pooling of interests. Accordingly, the consolidated accounts of Lawton Security Bancshares have been combined with the accounts of the Company and are included in the Company's consolidated financial statements for all periods presented. In October 1998, the Company completed a merger with AmQuest Financial Corp. of Duncan, Oklahoma, which had approximately $526,000 in total assets. The merger was effected through the exchange of 2,522,594 shares of BancFirst Corporation common stock for all of the AmQuest common stock outstanding, and was accounted for as a pooling of interests. Accordingly, the consolidated accounts of AmQuest have been combined with the accounts of the Company and are included in the Company's consolidated financial statements for all periods presented. The Company recorded estimated restructuring charges of $1,912 upon consummation of the merger in October 1998. These charges consist of termination benefits of $345 for 37 employees terminated and $1,567 for loss on facilities and other assets to be sold or abandoned. Other merger and conversion related expenses estimated at $1,200 were incurred. Additionally, the Company restated AmQuest's allowance for possible loan losses to conform to its own methodology; accordingly, the allowance for possible loan losses was increased by $1,400, which was applied retroactively to prior periods. In December 1998, the Company completed the acquisition of Kingfisher Bancorp, Inc. which had total assets of approximately $91,000. The acquisition was for cash of $12,000 and was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company's consolidated financial statements from the date of the acquisition forward. A core deposit intangible of $286 and goodwill of $1,871 were recorded in the acquisition. The acquisition did not have a material effect on the results of operations of the Company for 1998. In February 1999, the Company sold a branch in Anadarko, Oklahoma, which had deposits of approximately $15,500. The sale resulted in a pretax gain of approximately $900. In November 1999, the Company entered into an agreement to purchase certain assets and assume certain liabilities of First State Bank of Oklahoma City, Oklahoma. Under the terms of the agreement, the Company will organize a new wholly-owned bank under the First State Bank name that will complete the purchase and assumption. The transaction is subject to regulatory approval, but is expected to be completed in December 1999. The new First State Bank will have approximately $120,000 in total assets, $1,750 in intangible assets and $8,300 in stockholders' equity. The purchase and assumption will be accounted for as a purchase. Accordingly, the effects of the purchase will be included in the Company's consolidated financial statements from the date of the purchase forward, and will not have a material effect on the results of operations of the Company for 1999. (4) TENDER OFFER In June 1999, the Company completed a Dutch auction issuer tender offer and purchased 1,186,502 shares of its common stock for the maximum offer price of $38.00 per share. Cash on hand and two borrowings totaling $7,600 were used to pay for the purchase of the stock. The two borrowings under a $12,000 revolving line of credit were at rates of 6.3% and 6.5%, and matured in July and October 1999. 6 (5) SECURITIES The table below summarizes securities held for investment and securities available for sale.
September 30, December 31, ------------------------- 1999 1998 1998 ----------- ----------- ------------ Held for investment at cost (market value; $103,062, $132,199, and $132,804, respectively) $103,788 $129,637 $130,803 Available for sale, at market value 461,650 435,117 451,846 ----------- ----------- ------------ Total $565,438 $564,754 $582,649 =========== =========== ============
(6) COMPREHENSIVE INCOME The only component of comprehensive income reported by the Company is the unrealized gain or loss on securities available for sale. The amount of this unrealized gain or loss, net of tax, has been presented in the statement of income for each period as a component of other comprehensive income. Below is a summary of the tax effects of this unrealized gain or loss.
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------ ----------------------------------- 1999 1998 1999 1998 ---------------- --------------- --------------- --------------- Unrealized gain (loss) during the period: Before-tax amount $ 133 $ 5,329 $(9,543) $ 5,213 Tax (expense) benefit (1,151) (1,877) 3,300 (1,825) ---------------- --------------- --------------- --------------- Net-of-tax amount $(1,018) $ 3,452 $(6,243) $ 3,388 ================ =============== =============== ===============
The amount of unrealized gain or loss included in accumulated other comprehensive income is summarized below.
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------ ----------------------------------- 1999 1998 1999 1998 ---------------- --------------- --------------- --------------- Unrealized gain (loss) on securities: Beginning balance $ 206 $1,724 $ 5,431 $1,788 Current period change (1,018) 3,452 (6,243) 3,388 ---------------- --------------- --------------- --------------- Ending balance $ (812) $5,176 $ (812) $5,176 ================ =============== =============== ===============
7 (7) NET INCOME PER COMMON SHARE Basic and diluted net income per common share are calculated as follows:
Income Shares Per Share (Numerator) (Denominator) Amount ------------------ ----------------- --------------- Three Months Ended September 30, 1999 - ------------------------------------- Basic Income available to common stockholders $ 6,030 8,167,951 $0.74 =============== Effect of stock options -- 101,306 ------------------ ----------------- Diluted Income available to common stockholders plus assumed exercises of stock options $ 6,030 8,269,257 $0.73 ================== ================= =============== Three Months Ended September 30, 1998 - ------------------------------------- Basic Income available to common stockholders $ 5,789 9,275,743 $0.62 =============== Effect of stock options -- 278,122 ------------------ ----------------- Diluted Income available to common stockholders plus assumed exercises of stock options $ 5,789 9,553,865 $0.61 ================== ================= =============== Nine Months Ended September 30, 1999 - ------------------------------------ Basic Income available to common stockholders $18,120 8,808,075 $2.06 =============== Effect of stock options -- 113,174 ------------------ ----------------- Diluted Income available to common stockholders plus assumed exercises of stock options $18,120 8,921,249 $2.03 ================== ================= =============== Nine Months Ended September 30, 1998 - ------------------------------------ Basic Income available to common stockholders $16,996 9,275,681 $1.83 =============== Effect of stock options -- 276,638 ------------------ ----------------- Diluted Income available to common stockholders plus assumed exercises of stock options $16,996 9,552,319 $1.78 ================== ================= ===============
Below is the number and average exercise prices of options that were excluded from the computation of diluted net income per share for each period because the options' exercise prices were greater than the average market price of the common shares.
Average Exercise Shares Price ------------- ------------------- Three Months Ended September 30, 1999 125,815 $ 36.54 Three Months Ended September 30, 1998 -- $ -- Nine Months Ended September 30, 1999 109,214 $ 36.80 Nine Months Ended September 30, 1998 -- $ --
8 (8) SEGMENT INFORMATION The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The four principal business units were metropolitan banks, community banks, other financial services, and executive, operations and support. Metropolitan and community banks offer traditional banking products such as commercial and retail lending, and a full line of deposit accounts. Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. Community banks consist of banking locations in communities throughout Oklahoma. Other financial services are specialty product business units including guaranteed small business lending, guaranteed student lending, residential mortgage lending, trust services, and electronic banking. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units. The results of operations and selected financial information for the four business units are as follows:
Other Executive, Metropolitan Community Financial Operations Banks Banks Services & Support Eliminations Consolidated ------------ ----------- --------- --------- ------------ ------------ Three Months Ended: September 30, 1999 Net interest income (expense) $ 6,007 $ 17,111 $ 1,037 $ (931) $ (1) $ 23,223 Noninterest income 1,175 3,789 1,569 7,524 (6,796) 7,261 Income before taxes 2,727 9,370 777 3,518 (6,796) 9,596 September 30, 1998 Net interest income (expense) $ 5,175 $ 17,514 $ 1,233 $ (487) $ (50) $ 23,385 Noninterest income 872 3,811 1,343 7,257 (6,902) 6,381 Income before taxes 2,032 7,750 1,919 3,302 (6,450) 8,553 Nine Months Ended: September 30, 1999 Net interest income (expense) $ 17,184 $ 50,944 $ 3,524 $ (2,021) $ (9) $ 69,622 Noninterest income 3,394 12,196 4,218 21,340 (19,429) 21,719 Income before taxes 7,571 27,878 2,136 10,495 (19,296) 28,784 September 30, 1998 Net interest income (expense) $ 14,786 $ 53,110 $ 2,732 $ (1,029) $ (101) $ 69,498 Noninterest income 2,615 11,300 3,539 21,723 (20,846) 18,331 Income before taxes 5,847 27,012 2,936 11,217 (20,021) 26,991 Total Assets: September 30, 1999 $ 566,190 $ 1,610,299 $ 98,245 $ 111,188 $ (189,926) $ 2,195,996 September 30, 1998 $ 474,766 $ 1,602,386 $ 101,939 $ 203,272 $ (223,256) $ 2,159,107
The financial information for each business unit is presented on the basis used internally by management to evaluate performance and allocate resources. The Company utilizes a transfer pricing system to allocate the benefit or cost of funds provided or used by the various business units. Certain services provided by the support group to other business units, such as item processing, are allocated at rates approximating the cost of providing the services. Eliminations are adjustments to consolidate the business units and companies. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. BANCFIRST CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SUMMARY Net income for the third quarter ended September 30, 1999 was $6.03 million, up from $5.79 million for the same quarter of the previous year. Diluted net income per share was $0.74, up from $0.61 for the third quarter of 1998. Net income for the first nine months of 1999 was $18.1 million, compared to $17 million for the first nine months of 1998. Diluted net income per share year-to-date was $2.03 and $1.78 for 1999 and 1998, respectively. Total assets were $2.2 billion at September 30, 1999, down $140 million from December 31, 1998, but up $36.9 million from September 30, 1998. The higher total assets at year-end 1998 was due in part to an inflow of temporary deposits. The asset growth compared to the third quarter of 1998 was due primarily to the acquisition of Kingfisher Bancorp, Inc. ("Kingfisher Bancorp") in December 1998. Stockholders' equity was $165 million at September 30, 1999, a decrease of $37.3 million compared to December 31, 1998 and $34.4 million compared to September 30, 1998. In June 1999, the Company completed a Dutch auction issuer tender offer and repurchased 1,186,502 shares of its common stock for $45.1 million. In November 1999, the Company entered into an agreement to purchase certain assets and assume certain liabilities of First State Bank of Oklahoma City, Oklahoma. Under the terms of the agreement, the Company will organize a new wholly-owned bank under the First State Bank name that will complete the purchase and assumption. The transaction is subject to regulatory approval, but is expected to be completed in December 1999. The new First State Bank will have approximately $120 million in total assets, $1.75 million in intangible assets and $8.3million in stockholders' equity. RESULTS OF OPERATIONS Third Quarter Net interest income decreased by $162,000 compared to the third quarter of 1998, primarily as a result of a decrease in the net interest margin from 4.81% to 4.66%. Average net earning assets decreased $3.12 million compared to the third quarter of 1998, while net interest spread was 3.88% for the quarter, down from 3.92% for the third quarter of 1998. The lower net interest spread and net interest margin are the result of lower interest rates, a flatter yield curve and competitive pricing pressures on loans. The Company provided $418,000 for possible loan losses for the third quarter, compared to $596,000 for the third quarter of 1998. Net loan charge- offs were $509,000 for the third quarter of 1999, compared to $481,000 for the third quarter of 1998. The net charge-offs represent an annualized rate of only 0.15% of total loans for both the third quarter of 1999 and 1998. Noninterest income increased $880,000, or 13.8%, compared to the third quarter of 1998 due to internal growth in service charges on deposits, the acquisition of Kingfisher Bancorp. and securities gains. Noninterest expense increased $147,000, or 0.71%, as a net result of the acquisition of Kingfisher Bancorp and various cost savings. Income tax expense increased $802,000 compared to the third quarter of 1998. The effective tax rate on income before taxes was 37.2%, up from 32.3% in the third quarter of 1998. Year-To-Date Net interest income increased $124,000 for the nine months ended September 30, 1999, compared to the same period of 1998. Average net earning assets increased $12.5 million compared to 1998, while net interest spread was 3.86% in 1999, down from 3.98% in 1998. Net interest margin for the first nine months of 1999 was 4.66%, compared to 4.88% for the first nine months of 1998. The lower net interest spread and net interest margin are the result of lower 10 interest rates, a flatter yield curve and competitive pricing pressures on loans. The Company provided $1.82 million for possible loan losses for the nine months ended September 30, 1999, compared to $1.87 million for the first nine months of 1998. Net loan charge-offs were $1.31 million in 1999, compared to $1.27 million in 1998. The net charge-offs represent an annualized rate of only 0.13% of total loans for both 1999 and 1998. Noninterest income increased $3.39 million, or 18.5%, compared to the first nine months of 1998, due to internal growth in service charges on deposits, the acquisition of Kingfisher Bancorp, securities gains and a $890,000 gain on the sale of a branch in Anadarko, Oklahoma. Noninterest expense increased $1.76 million, or 2.99%, as a net result of the acquisition of Kingfisher Bancorp and various cost savings. Income tax expense increased $669,000 compared to the first nine months of 1998. The year-to-date effective tax rate on income before taxes was 37% for both 1999 and 1998. FINANCIAL POSITION Total securities decreased $17.2 million compared to December 31, 1998 and increased $684,000 compared to September 30, 1998. The size of the Company's securities portfolio is a function of liquidity management and excess funds available for investment. The Company has maintained a very liquid securities portfolio to provide funds for loan growth. Changes in funding from deposits and use of funds for loan growth resulted in the changes in the securities portfolio. The net unrealized loss on securities available for sale was $1.29 million at the end of the third quarter of 1999, compared to a gain of $8.25 million at December 31, 1998 and a gain of $8 million at September 30, 1998. The average taxable equivalent yield on the securities portfolio for the third quarter decreased to 6.02% from 6.38% for the same quarter of 1998. Total loans increased $25.3 million from December 31, 1998 and $106 million from September 30, 1998, due to internal growth and approximately $50 million of loans acquired with Kingfisher Bancorp. The allowance for possible loan losses increased $514,000 from year-end 1998 and $2.09 million from the third quarter of 1998. The allowance as a percentage of total loans was 1.50%, 1.47% and 1.41% at September 30, 1999, December 31, 1998 and September 30, 1998, respectively. The allowance to nonperforming and restructured loans ratios at the same dates were 169.42%, 158.69% and 207.60%, respectively. Nonperforming and restructured assets totaled $13.2 million, compared to $14 million at year-end 1998 and $10 million at September 30, 1998. Although the ratio of nonperforming and restructured assets to total assets is only 0.60%, it is reasonable to expect nonperforming loans and loan losses to rise over time to historical norms as a result of future economic and credit cycles. Total deposits decreased $78.3 million compared to December 31, 1998 and increased $80 million compared to September 30, 1998. Deposits were higher at year-end 1998 due to an inflow of temporary deposits. The increase compared to the third quarter of 1998 is the net result of the acquisition of Kingfisher Bancorp, which added approximately $76 million in deposits, internal growth and the sale of approximately $70 million of deposits that were sold with former NationsBank branches and the Anadarko branch. The Company's deposit base continues to be comprised substantially of core deposits, with large denomination certificates of deposit being only 12.3% of total deposits at September 30, 1999. Short-term borrowings decreased $34.6 million from December 31, 1998 and $17.3 million from September 30, 1998. Fluctuations in short-term borrowings are a function of federal funds purchased from correspondent banks, customer demand for repurchase agreements and liquidity needs of the bank. At year-end 1998, federal funds purchased from correspondent banks were higher than at either September 30, 1999 or 1998. Long-term borrowings increased $10.6 million from year-end 1998 and $8.97 million from the third quarter of 1998 due to additional Federal Home Loan Bank borrowings. The Company uses these borrowings primarily to match-fund long-term fixed-rate loans. 11 Stockholders' equity decreased to $165 million from $202 million at year- end 1998 and $199 million at September 30, 1998. The decrease is the result of a Dutch auction issuer tender offer completed by the Company in June 1999. The Company repurchased 1,186,502 shares of its common stock for $45.1 million. Average stockholders' equity to average assets for the quarter was 7.31%, compared to 9.02% at year-end 1998 and 8.96% for the third quarter of 1998. The Company's leverage ratio and total risk-based capital ratio were 7.74% and 13.12%, respectively, at September 30, 1999, well in excess of the regulatory minimums. Year 2000 Exposure Many computer systems and devices using embedded computer chips currently in operation worldwide use only two digits to specify the year. There is a significant risk that these systems and devices could produce inaccurate results, or may not function properly, beginning January 1, 2000 when two-digit year numbers could be processed as being in the previous century. The Company is exposed to the risk that not only the systems and devices it uses will malfunction, but also those of its customers, suppliers and other parties with whom it conducts business. Such malfunctions could expose the Company to losses from operational errors and failures, as well as customer claims, lawsuits and regulatory penalties for noncompliance. While the extent of these possible losses can not be estimated, such losses could have a material adverse effect on the Company's results of operations, liquidity and financial condition. During 1997, the Company commenced a Year 2000 Project to conduct a comprehensive review of its outside data processing services, internal computer systems and other mechanical and computerized equipment. The purpose of the project is to determine and plan for necessary changes to assure that its systems and equipment will function properly in the year 2000. The project also includes communications with other parties to determine the extent to which the parties are addressing the issue and the exposure to the Company in the event the parties fail to adequately plan for and resolve the issue. The plan developed by the Company consists of the following five phases: 1. Awareness 2. Assessment 3. Renovation 4. Validation 5. Implementation All five phases of the plan have been completed. Testing of mission critical applications was completed in March 1999. An evaluation of Year 2000 credit risk has been completed. Contingency plans have been prepared for each mission critical application. The total cost of addressing the Year 2000 issue is not estimated to be material. The Company's core business applications are provided by a data processing company that has devoted substantial resources to assuring that the applications are certified as Year 2000 compliant by the end of 1998. Certain of the other systems either have been replaced, or were already going to be replaced with newer technology, and their replacement is not being accelerated due the Year 2000 issue. Also, no significant information technology projects are being deferred because of the Year 2000 issue. Future Application of Accounting Standards See note (2) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements. Segment Information See note (8) of the Notes to Consolidated Financial Statements for disclosures regarding business segments. 12 Forward Looking Statements The Company may make forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) with respect to earnings, credit quality, year 2000 compliance, corporate objectives, interest rates and other financial and business matters. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions, the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Actual results may differ materially from forward-looking statements. 13 BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ---------------------------- PERFORMANCE STATISTICS 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net income per share - basic $ 0.74 $ 0.62 $ 2.06 $ 1.83 Net income per share - diluted 0.73 0.61 2.03 1.78 Cash dividends per share 0.14 0.12 0.42 0.36 Return on average assets 1.07% 1.06% 1.07% 1.06% Return on average stockholders' equity 14.68 11.79 12.50 11.95 Efficiency ratio 67.15 69.26 66.49 67.14
BALANCE SHEET AND ASSET QUALITY STATISTICS September 30, December 31, ---------------------------- 1999 1998 1998 ------------ ------------ ------------ Book value per share $ 20.16 $ 21.43 $ 21.73 Tangible book value per share 17.44 18.86 19.14 Average loans to deposits (year-to-date) 68.34% 69.09% 68.83% Nonperforming and restructured assets to total assets 0.60 0.47 0.60 Allowance for possible loan losses to total loans 1.50 1.41 1.47 Allowance for possible loan losses to nonperforming and restructured loans 169.42 207.60 158.69
CONSOLIDATED AVERAGE BALANCE SHEETS Three Months Ended September 30, ------------------------------------------------------------- AND INTEREST MARGIN ANALYSIS 1999 1998 ----------------------------- ---------------------------- Taxable Equivalent Basis Average Average Average Average Balance Yield/Rate Balance Yield/Rate ------------ ------------ ------------ ------------ Earning assets: Loans $ 1,350,909 8.90% $ 1,297,880 9.38% Securities 571,005 6.02 581,288 6.38 Federal funds sold 94,638 4.90 78,438 5.25 ------------ ------------ Total earning assets 2,016,552 7.89 1,957,606 8.32 ------------ ------------ Nonearning assets: Cash and due from banks 117,265 122,546 Interest receivable and other assets 115,698 111,080 Allowance for possible loan losses (20,230) (18,156) ------------ ------------ Total nonearning assets 212,733 215,470 ------------ ------------ Total assets $ 2,229,285 $ 2,173,076 ============ ============ Interest-bearing liabilities: Interest-bearing deposits $ 1,554,627 3.88% $ 1,481,619 4.30% Short-term borrowings 24,869 4.58 39,726 4.46 Long-term borrowings 22,300 6.03 18,390 4.90 9.65% Capital Securities 25,000 9.70 25,000 9.71 ------------ ------------ Total interest-bearing liabilities 1,626,796 4.01 1,564,735 4.40 ------------ ------------ Interest-free funds: Noninterest-bearing deposits 425,842 400,193 Interest payable and other liabilities 13,636 13,363 Stockholders' equity 163,011 194,785 ------------ ------------ Total interest-free funds 602,489 608,341 ------------ ------------ Total liabilities and stockholders' equity $ 2,229,285 $ 2,173,076 ============ ============ Net interest spread 3.88% 3.92% ============ ============ Net interest margin 4.66% 4.81% ============ ============
14 Item 3. Quantitative and Qualitative Disclosures About Market Risk. There have been no significant changes in the Registrants disclosures regarding market risk since December 31, 1998, the date of its annual report to stockholders. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Exhibit --------- ----------------------------------------------------------------- 2.1 Purchase and Assumption Agreement between NationsBank, N.A. and BancFirst dated September 26, 1997 (filed as exhibit 2.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 and incorporated herein by reference). 2.2 Merger Agreement dated May 6, 1998 between BancFirst Corporation and AmQuest Financial Corp. (filed as Exhibit 2.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and incorporated herein by reference). 3.1 Second Amended and Restated Certificate of incorporation (filed as Exhibit 1 to the Company's Form 8-A/A filed July 23, 1998 and incorporated herein by reference. 3.2 Certificate of Designations of Preferred Stock (filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference). 3.3 Amended By-Laws (filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992 and incorporated herein by reference). 4.1 Amended and Restated Declaration of Trust of BFC Capital Trust I dated as of February 4, 1997 (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference.) 4.2 Indenture dated as of February 4, 1997 (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference.) 4.3 Series A Capital Securities Guarantee Agreement dated as of February 4, 1997 (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference. 4.4 Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including as Exhibit A the form of Certificate of Designations of the Company setting forth the terms of the Preferred Stock, as Exhibit B the form of Right Certificate and as Exhibit C the form of Summary of Rights Agreement (filed as Exhibit 1 to the Company's Current Report on Form 8-K dated February 25, 1999 and incorporated herein by reference). 27.1* Financial Data Schedule for the nine months ended September 30, 1999. 27.2* Financial Data Schedule for the nine months ended September 30, 1998. - -------------------------------------------------------------------------------- *Filed herewith 15 (b) The following report on Form 8-K was filed by the Company during the quarter ended September 30, 1999. Date of Report Items Reported -------------- -------------- September 23, 1999 Change in independent accountants from PricewaterhouseCoopers LLP to Arthur Andersen LLP SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BANCFIRST CORPORATION --------------------- (Registrant) Date November 15, 1999 \s\ Randy P. Foraker ----------------- -------------------------------------- (Signature) Randy P. Foraker Senior Vice President and Controller; Assistant Secretary/Treasurer (Principal Accounting Officer) 16 EX-27.1 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 105,006 189 63,000 0 461,650 103,788 103,062 1,364,179 20,173 2,195,996 1,946,509 20,284 16,009 48,566 0 0 8,166 156,462 2,195,996 89,963 24,706 4,355 119,024 45,346 49,402 69,622 1,823 244 60,734 28,784 18,120 0 0 18,120 2.06 2.03 4.57 8,561 2,212 1,134 32,837 19,659 2,098 789 20,173 20,173 0 1,363
EX-27.2 3 FINANCIAL DATA SCHEDULE
9 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED INTERIM FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1998 JAN-31-1998 SEP-30-1998 101,481 78 116,596 0 435,117 129,637 132,199 1,283,434 18,084 2,159,107 1,866,580 37,618 16,298 39,598 0 0 9,618 189,395 2,159,107 91,369 26,378 3,231 120,978 47,659 51,480 69,498 1,867 12 58,971 26,991 16,996 0 0 16,996 1.83 1.78 4.79 6,621 1,611 478 32,840 17,458 2,365 1,095 18,084 18,084 0 1,297
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