10-Q 1 banf-10q_20160630.htm BANF-10Q-20160630 banf-10q_20160630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE 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, Oklahoma City, Oklahoma

 

73102-8405

(Address of principal executive offices)

 

(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

N/A

(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  o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

Accelerated filer

x

 

 

 

 

Non-accelerated filer

o  (Do not check if a smaller reporting company)

Smaller reporting company

o

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  o    No  x

As of July 29, 2016 there were 15,583,833 shares of the registrant’s Common Stock outstanding.

 

 

 

 


PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

(unaudited)

 

 

(see Note 1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

223,899

 

 

$

203,364

 

Interest-bearing deposits with banks

 

 

1,373,923

 

 

 

1,394,813

 

Securities (fair value: $419,298 and $553,010, respectively)

 

 

419,238

 

 

 

552,949

 

Loans held for sale

 

 

10,427

 

 

 

13,725

 

Loans (net of unearned interest)

 

 

4,326,636

 

 

 

4,232,048

 

Allowance for loan losses

 

 

(46,566

)

 

 

(41,666

)

Loans, net of allowance for loan losses

 

 

4,280,070

 

 

 

4,190,382

 

Premises and equipment, net

 

 

126,343

 

 

 

126,813

 

Other real estate owned

 

 

4,123

 

 

 

7,984

 

Intangible assets, net

 

 

14,485

 

 

 

15,695

 

Goodwill

 

 

54,042

 

 

 

54,042

 

Accrued interest receivable and other assets

 

 

176,826

 

 

 

133,062

 

Total assets

 

$

6,683,376

 

 

$

6,692,829

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,390,005

 

 

$

2,409,769

 

Interest-bearing

 

 

3,553,977

 

 

 

3,563,589

 

Total deposits

 

 

5,943,982

 

 

 

5,973,358

 

Short-term borrowings

 

 

3,500

 

 

 

500

 

Accrued interest payable and other liabilities

 

 

27,105

 

 

 

31,502

 

Junior subordinated debentures

 

 

31,959

 

 

 

31,959

 

Total liabilities

 

 

6,006,546

 

 

 

6,037,319

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued

 

 

 

 

 

 

Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued

 

 

 

 

 

 

Common stock, $1.00 par, 20,000,000 shares authorized; shares issued and

   outstanding: 15,560,271 and 15,597,446, respectively

 

 

15,560

 

 

 

15,597

 

Capital surplus

 

 

105,676

 

 

 

102,865

 

Retained earnings

 

 

552,991

 

 

 

535,521

 

Accumulated other comprehensive income, net of income tax of $1,642

and $962, respectively

 

 

2,603

 

 

 

1,527

 

Total stockholders' equity

 

 

676,830

 

 

 

655,510

 

Total liabilities and stockholders' equity

 

$

6,683,376

 

 

$

6,692,829

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

2


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

 

2016

 

 

 

2015

 

 

 

2016

 

 

 

2015

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

51,046

 

 

$

46,490

 

 

$

101,241

 

 

$

92,439

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,344

 

 

 

1,458

 

 

 

2,671

 

 

 

2,857

 

Tax-exempt

 

 

243

 

 

 

235

 

 

 

498

 

 

 

481

 

Interest-bearing deposits with banks

 

 

1,852

 

 

 

1,066

 

 

 

3,654

 

 

 

2,128

 

Total interest income

 

 

54,485

 

 

 

49,249

 

 

 

108,064

 

 

 

97,905

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,092

 

 

 

2,542

 

 

 

6,172

 

 

 

5,080

 

Short-term borrowings

 

 

2

 

 

 

1

 

 

 

3

 

 

 

2

 

Junior subordinated debentures

 

 

523

 

 

 

491

 

 

 

1,045

 

 

 

982

 

Total interest expense

 

 

3,617

 

 

 

3,034

 

 

 

7,220

 

 

 

6,064

 

Net interest income

 

 

50,868

 

 

 

46,215

 

 

 

100,844

 

 

 

91,841

 

Provision for loan losses

 

 

2,804

 

 

 

1,271

 

 

 

6,907

 

 

 

2,605

 

Net interest income after provision for loan losses

 

 

48,064

 

 

 

44,944

 

 

 

93,937

 

 

 

89,236

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust revenue

 

 

2,602

 

 

 

2,200

 

 

 

5,067

 

 

 

4,542

 

Service charges on deposits

 

 

15,485

 

 

 

14,312

 

 

 

30,195

 

 

 

27,664

 

Securities transactions (includes accumulated other comprehensive income reclassifications of $0, $3,306, $100 and $3,912, respectively)

 

 

(65

)

 

 

5,392

 

 

 

35

 

 

 

7,121

 

Income from sales of loans

 

 

695

 

 

 

549

 

 

 

1,257

 

 

 

989

 

Insurance commissions

 

 

3,255

 

 

 

3,120

 

 

 

7,390

 

 

 

7,188

 

Cash management

 

 

2,732

 

 

 

1,886

 

 

 

5,050

 

 

 

3,705

 

Gain on sale of other assets

 

 

55

 

 

 

41

 

 

 

59

 

 

 

81

 

Other

 

 

1,298

 

 

 

1,215

 

 

 

2,621

 

 

 

2,721

 

Total noninterest income

 

 

26,057

 

 

 

28,715

 

 

 

51,674

 

 

 

54,011

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

30,008

 

 

 

27,886

 

 

 

59,365

 

 

 

55,399

 

Occupancy, net

 

 

3,071

 

 

 

2,700

 

 

 

5,898

 

 

 

5,535

 

Depreciation

 

 

2,567

 

 

 

2,449

 

 

 

5,097

 

 

 

4,913

 

Amortization of intangible assets

 

 

580

 

 

 

445

 

 

 

1,161

 

 

 

889

 

Data processing services

 

 

1,174

 

 

 

1,179

 

 

 

2,389

 

 

 

2,296

 

Net expense (income) from other real estate owned

 

 

35

 

 

 

(184

)

 

 

(1,106

)

 

 

130

 

Marketing and business promotion

 

 

1,624

 

 

 

1,401

 

 

 

3,479

 

 

 

3,080

 

Deposit insurance

 

 

855

 

 

 

836

 

 

 

1,694

 

 

 

1,662

 

Other

 

 

7,806

 

 

 

8,717

 

 

 

16,034

 

 

 

16,448

 

Total noninterest expense

 

 

47,720

 

 

 

45,429

 

 

 

94,011

 

 

 

90,352

 

Income before taxes

 

 

26,401

 

 

 

28,230

 

 

 

51,600

 

 

 

52,895

 

Income tax expense

 

 

8,908

 

 

 

9,677

 

 

 

17,528

 

 

 

18,083

 

Net income

 

$

17,493

 

 

$

18,553

 

 

$

34,072

 

 

$

34,812

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.12

 

 

$

1.19

 

 

$

2.19

 

 

$

2.24

 

Diluted

 

$

1.10

 

 

$

1.17

 

 

$

2.15

 

 

$

2.20

 

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities, net of tax of $(345), $284, $(719) and $(416), respectively

 

 

546

 

 

 

(453

)

 

 

1,137

 

 

 

658

 

Reclassification adjustment for gains included in net income, net of tax of $0, $1,279, $39 and $1,513, respectively

 

 

 

 

 

(2,027

)

 

 

(61

)

 

 

(2,399

)

Other comprehensive gains (losses), net of tax of $(345), $1,563, $(680) and $1,097, respectively

 

 

546

 

 

 

(2,480

)

 

 

1,076

 

 

 

(1,741

)

Comprehensive income

 

$

18,039

 

 

$

16,073

 

 

$

35,148

 

 

$

33,071

 

The accompanying Notes are an integral part of these consolidated financial statements.

3


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

COMMON STOCK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued at beginning of period

 

$

15,528

 

 

$

15,512

 

 

$

15,597

 

 

$

15,504

 

Shares issued

 

 

32

 

 

 

50

 

 

 

63

 

 

 

58

 

Shares acquired and canceled

 

 

 

 

 

 

 

 

(100

)

 

 

 

Issued at end of period

 

$

15,560

 

 

$

15,562

 

 

$

15,560

 

 

$

15,562

 

CAPITAL SURPLUS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

103,978

 

 

$

97,477

 

 

$

102,865

 

 

$

96,841

 

Common stock issued

 

 

996

 

 

 

1,080

 

 

 

1,867

 

 

 

1,316

 

Tax effect of stock options

 

 

252

 

 

 

355

 

 

 

43

 

 

 

291

 

Stock-based compensation arrangements

 

 

450

 

 

 

290

 

 

 

901

 

 

 

754

 

Balance at end of period

 

$

105,676

 

 

$

99,202

 

 

$

105,676

 

 

$

99,202

 

RETAINED EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

541,098

 

 

$

503,758

 

 

$

535,521

 

 

$

492,776

 

Net income

 

 

17,493

 

 

 

18,553

 

 

 

34,072

 

 

 

34,812

 

Dividends on common stock ($0.36, $0.34, $0.72 and $0.68 per share, respectively)

 

 

(5,600

)

 

 

(5,283

)

 

 

(11,179

)

 

 

(10,560

)

Common stock acquired and canceled

 

 

 

 

 

 

 

 

(5,423

)

 

 

 

Balance at end of period

 

$

552,991

 

 

$

517,028

 

 

$

552,991

 

 

$

517,028

 

ACCUMULATED OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,057

 

 

$

4,932

 

 

$

1,527

 

 

$

4,193

 

Net change

 

 

546

 

 

 

(2,480

)

 

 

1,076

 

 

 

(1,741

)

Balance at end of period

 

$

2,603

 

 

$

2,452

 

 

$

2,603

 

 

$

2,452

 

Total stockholders’ equity

 

$

676,830

 

 

$

634,244

 

 

$

676,830

 

 

$

634,244

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

4


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

34,072

 

 

$

34,812

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

6,907

 

 

 

2,605

 

Depreciation and amortization

 

 

6,258

 

 

 

5,802

 

Net amortization of securities premiums and discounts

 

 

184

 

 

 

445

 

Realized securities gains

 

 

(35

)

 

 

(7,121

)

Gain on sales of loans

 

 

(1,257

)

 

 

(989

)

Cash receipts from the sale of loans originated for sale

 

 

86,121

 

 

 

84,029

 

Cash disbursements for loans originated for sale

 

 

(81,566

)

 

 

(87,635

)

Deferred income tax benefit

 

 

(1,917

)

 

 

(1,464

)

Gain on other assets

 

 

(1,316

)

 

 

(65

)

Increase in interest receivable

 

 

(1,040

)

 

 

(740

)

Increase/(decrease) in interest payable

 

 

14

 

 

 

(14

)

Amortization of stock-based compensation arrangements

 

 

901

 

 

 

754

 

Other, net

 

 

(4,867

)

 

 

343

 

Net cash provided by operating activities

 

$

42,459

 

 

$

30,762

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of held for investment securities

 

 

(215

)

 

 

Purchases of available for sale securities

 

 

(8,553

)

 

 

(30,923

)

Proceeds from maturities, calls and paydowns of held for investment securities

 

 

690

 

 

 

670

 

Proceeds from maturities, calls and paydowns of available for sale securities

 

 

102,677

 

 

 

12,979

 

Proceeds from sales of available for sale securities

 

 

300

 

 

 

8,576

 

Net change in loans

 

 

(98,555

)

 

 

(10,312

)

Purchases of premises, equipment and computer software

 

 

(5,048

)

 

 

(4,797

)

Proceeds from the sale of other assets

 

 

7,020

 

 

 

3,647

 

Net cash provided by (used in) investing activities

 

 

(1,684

)

 

 

(20,160

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

(29,376

)

 

 

(96,483

)

Net increase/(decrease) in short-term borrowings

 

 

3,000

 

 

 

(1,907

)

Issuance of common stock, net

 

 

1,973

 

 

 

1,665

 

Common stock acquired

 

 

(5,523

)

 

 

Cash dividends paid

 

 

(11,204

)

 

 

(10,544

)

Net cash used in financing activities

 

 

(41,130

)

 

 

(107,269

)

Net decrease in cash, due from banks and interest-bearing deposits

 

 

(355

)

 

 

(96,667

)

Cash, due from banks and interest-bearing deposits at the beginning of the period

 

 

1,598,177

 

 

 

1,913,895

 

Cash, due from banks and interest-bearing deposits at the end of the period

 

$

1,597,822

 

 

$

1,817,228

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

7,207

 

 

$

6,078

 

Cash paid during the period for income taxes

 

$

17,900

 

 

$

17,230

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Unpaid common stock dividends declared

 

$

5,590

 

 

$

5,281

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

5


BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

(1)

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United State of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc. and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc. and BancFirst Agency, Inc.  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 unaudited interim consolidated financial statements.

The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

The unaudited interim consolidated 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, 2015, the date of the most recent annual report.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 requires enhanced disclosures related to the significant estimates and judgements used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the

6


treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 will be effective on January 1, 2017 and is not expected to have a significant impact on the Company’s financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases - (Topic 842).” ASU 2016-02 requires that lessees recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. Adoption of ASU 2016-02 is not expected to have a significant impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10).” ASU 2016-01 require all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. In addition, the amendment will require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Adoption of ASU 2016-01 is not expected to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40).”  ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about the Company’s ability to continue as a going concern and related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date the financial statements are issued.  The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. Adoption of ASU 2014-15 is not expected to have a significant impact on the Company’s financial statements.

 

 

(2)

RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

 

On October 8, 2015, the Company completed its acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang and El Reno, Oklahoma. Bank of Commerce had approximately $196 million in total assets, $147 million in loans, $175 million in deposits and $22 million in equity capital. The acquisition was accounted for under the acquisition method and the Company acquired 100% of the voting interest. Bank of Commerce operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on November 13, 2015. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $7.1 million and goodwill of approximately $9.4 million. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. The acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce complemented the Company’s community banking strategy by adding two communities to its banking network throughout Oklahoma.

 

During the quarter ended March 31, 2016, the Company had gains on the sale of other real estate owned totaling $1.2 million that is included in net expense from other real estate owned in the consolidated statements of comprehensive income.

 

 

(3)

SECURITIES

The following table summarizes securities held for investment and securities available for sale:

 

 

 

June 30, 2016

 

 

December 31, 2015

 

 

 

(Dollars in thousands)

 

Held for investment, at cost (fair value: $8,372 and $8,850, respectively)

 

$

8,312

 

 

$

8,789

 

Available for sale, at fair value

 

 

410,926

 

 

 

544,160

 

Total

 

$

419,238

 

 

$

552,949

 

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The following table summarizes the amortized cost and estimated fair values of securities held for investment:

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair

Value

 

June 30, 2016

 

(Dollars in thousands)

 

Mortgage backed securities (1)

 

$

301

 

 

$

24

 

 

$

 

 

$

325

 

States and political subdivisions

 

 

7,511

 

 

 

36

 

 

 

 

 

 

7,547

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

8,312

 

 

$

60

 

 

$

 

 

$

8,372

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage backed securities (1)

 

$

347

 

 

$

25

 

 

$

 

 

$

372

 

States and political subdivisions

 

 

7,942

 

 

 

36

 

 

 

 

 

 

7,978

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

8,789

 

 

$

61

 

 

$

 

 

$

8,850

 

The following table summarizes the amortized cost and estimated fair values of securities available for sale:

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair

Value

 

June 30, 2016

 

(Dollars in thousands)

 

U.S. treasuries

 

$

204,183

 

 

$

2,343

 

 

$

 

 

$

206,526

 

U.S. federal agencies

 

 

125,083

 

 

 

618

 

 

 

(51

)

 

 

125,650

 

Mortgage backed securities (1)

 

 

20,966

 

 

 

403

 

 

 

(555

)

 

 

20,814

 

States and political subdivisions

 

 

46,460

 

 

 

1,644

 

 

 

(67

)

 

 

48,037

 

Other securities (2)

 

 

9,989

 

 

 

142

 

 

 

(232

)

 

 

9,899

 

Total

 

$

406,681

 

 

$

5,150

 

 

$

(905

)

 

$

410,926

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

328,965

 

 

$

776

 

 

$

(45

)

 

$

329,696

 

U.S. federal agencies

 

 

131,522

 

 

 

527

 

 

 

(153

)

 

 

131,896

 

Mortgage backed securities (1)

 

 

21,973

 

 

 

425

 

 

 

(543

)

 

 

21,855

 

States and political subdivisions

 

 

49,521

 

 

 

1,447

 

 

 

(48

)

 

 

50,920

 

Other securities (2)

 

 

9,689

 

 

 

249

 

 

 

(145

)

 

 

9,793

 

Total

 

$

541,670

 

 

$

3,424

 

 

$

(934

)

 

$

544,160

 

 

 

(1)

Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.

 

(2)

Primarily consists of equity securities.

 

Realized gains are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income. In January 2015, Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst, recognized a pretax gain of approximately $1.7 million from the sale of one of its equity investments. In June 2015, Council Oak Partners, LLC, a wholly-owned subsidiary of the Company, recognized a pretax gain of approximately $5.3 million from the sale of one of its equity investments.

 

At June 30, 2016, $40.4 million of matured securities, which represent fair value, remained in other assets because of pledging requirements that were cleared the following day and transferred to cash. As of June 30, 2016 these were considered non-cash items and reduced the amount of proceeds from available for sale securities.

 

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The maturities of securities held for investment and available for sale are summarized in the following table using contractual maturities. Actual maturities may differ from contractual maturities due to obligations that are called or prepaid. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.

 

 

 

June 30, 2016

 

 

December 31, 2015

 

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

 

(Dollars in thousands)

 

Held for Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual maturity of debt securities: