10-Q 1 banf-10q_20180331.htm 10-Q banf-10q_20180331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2018

OR

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      No  .

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      No  .

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

Accelerated filer

 

 

 

 

Non-accelerated filer

  (Do not check if a smaller reporting company)

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        

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

As of April 30, 2018 there were 32,713,215 shares of the registrant’s Common Stock outstanding.

 

 

 

 


PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

 

2018

 

 

 

2017

 

 

 

(unaudited)

 

 

(see Note 1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

181,863

 

 

$

216,104

 

Interest-bearing deposits with banks

 

 

1,590,240

 

 

 

1,541,771

 

Federal funds sold

 

 

21,097

 

 

 

700

 

Securities (fair value: $493,108 and $470,006, respectively)

 

 

493,101

 

 

 

469,995

 

Loans held for sale

 

 

6,197

 

 

 

6,173

 

Loans (net of unearned interest)

 

 

4,984,484

 

 

 

4,721,995

 

Allowance for loan losses

 

 

(51,550

)

 

 

(51,666

)

Loans, net of allowance for loan losses

 

 

4,932,934

 

 

 

4,670,329

 

Premises and equipment, net

 

 

141,163

 

 

 

134,088

 

Other real estate owned

 

 

3,478

 

 

 

4,136

 

Intangible assets, net

 

 

18,782

 

 

 

11,082

 

Goodwill

 

 

79,796

 

 

 

54,042

 

Accrued interest receivable and other assets

 

 

146,991

 

 

 

144,736

 

Total assets

 

$

7,615,642

 

 

$

7,253,156

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,629,984

 

 

$

2,550,150

 

Interest-bearing

 

 

4,083,068

 

 

 

3,864,895

 

Total deposits

 

 

6,713,052

 

 

 

6,415,045

 

Short-term borrowings

 

 

100

 

 

 

900

 

Accrued interest payable and other liabilities

 

 

32,435

 

 

 

29,623

 

Junior subordinated debentures

 

 

31,959

 

 

 

31,959

 

Total liabilities

 

 

6,777,546

 

 

 

6,477,527

 

 

 

 

 

 

 

 

 

 

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, 40,000,000 shares authorized; shares issued and

   outstanding: 32,707,166 and 31,894,563, respectively

 

 

32,708

 

 

 

31,895

 

Capital surplus

 

 

147,762

 

 

 

107,481

 

Retained earnings

 

 

661,341

 

 

 

638,580

 

Accumulated other comprehensive loss, net of income tax of $(1,269)

and $(795), respectively

 

 

(3,715

)

 

 

(2,327

)

Total stockholders' equity

 

 

838,096

 

 

 

775,629

 

Total liabilities and stockholders' equity

 

$

7,615,642

 

 

$

7,253,156

 

 

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

 

 

 

March 31,

 

 

 

 

2018

 

 

 

2017

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans, including fees

 

$

62,919

 

 

$

53,635

 

Securities:

 

 

 

 

 

 

 

 

Taxable

 

 

1,898

 

 

 

1,761

 

Tax-exempt

 

 

171

 

 

 

187

 

Federal funds sold

 

 

104

 

 

 

 

Interest-bearing deposits with banks

 

 

5,782

 

 

 

3,440

 

Total interest income

 

 

70,874

 

 

 

59,023

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

7,269

 

 

 

3,725

 

Short-term borrowings

 

 

35

 

 

 

3

 

Junior subordinated debentures

 

 

535

 

 

 

527

 

Total interest expense

 

 

7,839

 

 

 

4,255

 

Net interest income

 

 

63,035

 

 

 

54,768

 

Provision for loan losses

 

 

314

 

 

 

72

 

Net interest income after provision for loan losses

 

 

62,721

 

 

 

54,696

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Trust revenue

 

 

3,129

 

 

 

2,952

 

Service charges on deposits

 

 

16,653

 

 

 

15,778

 

Securities transactions (includes no accumulated other comprehensive income reclassifications)

 

 

(14

)

 

 

 

Income from sales of loans

 

 

651

 

 

 

632

 

Insurance commissions

 

 

5,199

 

 

 

4,563

 

Cash management

 

 

3,021

 

 

 

2,754

 

Gain (loss) on sale of other assets

 

 

26

 

 

 

(24

)

Other

 

 

1,445

 

 

 

1,430

 

Total noninterest income

 

 

30,110

 

 

 

28,085

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

34,190

 

 

 

30,654

 

Occupancy, net

 

 

3,402

 

 

 

2,974

 

Depreciation

 

 

2,410

 

 

 

2,420

 

Amortization of intangible assets

 

 

733

 

 

 

547

 

Data processing services

 

 

1,203

 

 

 

1,195

 

Net expense from other real estate owned

 

 

26

 

 

 

50

 

Marketing and business promotion

 

 

2,352

 

 

 

2,215

 

Deposit insurance

 

 

619

 

 

 

588

 

Other

 

 

10,955

 

 

 

8,945

 

Total noninterest expense

 

 

55,890

 

 

 

49,588

 

Income before taxes

 

 

36,941

 

 

 

33,193

 

Income tax expense

 

 

7,321

 

 

 

11,143

 

Net income

 

$

29,620

 

 

$

22,050

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

Basic

 

$

0.91

 

 

$

0.70

 

Diluted

 

$

0.89

 

 

$

0.68

 

OTHER COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

Unrealized losses on securities, net of tax of $474 and $113, respectively

 

 

(1,388

)

 

 

(178

)

Reclassification adjustment for losses included in net income

 

 

 

 

 

 

Other comprehensive losses, net of tax of $474 and $113, respectively

 

 

(1,388

)

 

 

(178

)

Comprehensive income

 

$

28,232

 

 

$

21,872

 

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

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

COMMON STOCK

 

 

 

 

 

 

 

 

Issued at beginning of period

 

$

31,895

 

 

$

31,622

 

Shares issued for stock options

 

 

80

 

 

 

160

 

Shares issued for acquisitions

 

 

733

 

 

 

 

Issued at end of period

 

$

32,708

 

 

$

31,782

 

CAPITAL SURPLUS

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

107,481

 

 

$

101,730

 

Common stock issued for stock options

 

 

1,210

 

 

 

2,592

 

Common stock issued for acquisitions

 

 

38,765

 

 

 

 

Stock-based compensation arrangements

 

 

306

 

 

 

222

 

Balance at end of period

 

$

147,762

 

 

$

104,544

 

RETAINED EARNINGS

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

638,580

 

 

$

577,648

 

Net income

 

 

29,620

 

 

 

22,050

 

Dividends on common stock ($0.21 and $0.19 per share, respectively)

 

 

(6,859

)

 

 

(6,067

)

Balance at end of period

 

$

661,341

 

 

$

593,631

 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

Unrealized gains on securities:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

(2,327

)

 

$

94

 

Net change

 

 

(1,388

)

 

 

(178

)

Balance at end of period

 

$

(3,715

)

 

$

(84

)

Total stockholders’ equity

 

$

838,096

 

 

$

729,873

 

 

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

 

4


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

29,620

 

 

$

22,050

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

314

 

 

 

72

 

Depreciation and amortization

 

 

3,143

 

 

 

2,967

 

Net amortization of securities premiums and discounts

 

 

(49

)

 

 

(47

)

Realized securities losses

 

 

14

 

 

 

Gain on sales of loans

 

 

(651

)

 

 

(632

)

Cash receipts from the sale of loans originated for sale

 

 

44,558

 

 

 

43,005

 

Cash disbursements for loans originated for sale

 

 

(43,949

)

 

 

(40,826

)

Deferred income tax benefit

 

 

(117

)

 

 

(485

)

(Gain)/loss on other assets

 

 

(21

)

 

 

35

 

(Increase)/decrease in interest receivable

 

 

(1,111

)

 

 

598

 

Increase in interest payable

 

 

353

 

 

 

22

 

Amortization of stock-based compensation arrangements

 

 

306

 

 

 

222

 

Excess tax benefit from stock-based compensation arrangements

 

 

(647

)

 

 

(376

)

Other, net

 

 

(8,067

)

 

 

5,310

 

Net cash provided by operating activities

 

$

23,696

 

 

$

31,915

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Net cash received from acquisitions, net of cash paid

 

$

6,248

 

 

$                          —

 

Net decrease in federal funds sold

 

 

2,451

 

 

 

500

 

Purchases of available for sale securities

 

 

(30,861

)

 

 

(20,511

)

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

 

 

213

 

 

 

361

 

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

 

 

5,729

 

 

 

26,489

 

Proceeds from sales of available for sale securities

 

 

1,460

 

 

 

Net change in loans

 

 

48,819

 

 

 

7,366

 

Purchases of premises, equipment and computer software

 

 

(7,168

)

 

 

(3,369

)

Proceeds from the sale of other real estate owned and other assets

 

 

1,802

 

 

 

1,186

 

Net cash provided by investing activities

 

 

28,693

 

 

 

12,022

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

(31,953

)

 

 

146,570

 

Net (decrease)/increase in short-term borrowings

 

 

(800

)

 

 

300

 

Issuance of common stock in connection with stock options, net

 

 

1,290

 

 

 

2,752

 

Cash dividends paid

 

 

(6,698

)

 

 

(6,008

)

Net cash (used in) provided by financing activities

 

 

(38,161

)

 

 

143,614

 

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

 

 

14,228

 

 

 

187,551

 

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

 

 

1,757,875

 

 

 

1,850,461

 

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

 

$

1,772,103

 

 

$

2,038,012

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

7,486

 

 

$

4,235

 

Cash paid during the period for income taxes

 

$

1,250

 

 

$

1,100

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Stock issued in acquisitions

 

$

39,498

 

 

$

 

Cash consideration for acquisitions

 

$

24,722

 

 

$

 

Fair value of assets acquired in acquisitions

 

$

377,320

 

 

$

 

Liabilities assumed in acquisitions

 

$

338,860

 

 

$

 

Unpaid common stock dividends declared

 

$

6,854

 

 

$

6,028

 

 

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, 2017.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, First Bank of Chandler, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., BancFirst Risk and Insurance Company 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, 2017, 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, 2017, the date of the most recent annual report.

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

Standards Adopted During Current Period:

In February 2018, the FASB issued ASU No. 2018-2, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-2 allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-2 is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company elected to early adopt the provisions of ASU 2018-2 and the amount to reclassify was immaterial to the Company’s financial statements. The Company’s policy is to release material stranded tax effects on a specific identification basis.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about types of changes to the terms of conditions of share-based payment awards that would require an entity to apply modification accounting under ASC 718. ASU 2017-09 was adopted on January 1, 2018 and did not have a significant impact on the Company’s financial statements and no prior periods were adjusted.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 removes the second step of goodwill testing. ASU 2017-04 is effective for fiscal years beginning after December 31, 2019 with early adoption permitted. The Company elected to early adopt ASU 2017-4 and it did not have a significant impact on the Company’s financial statements.

6


In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of a business. ASU 2017-01 was adopted on January 1, 2018 and did not have a significant impact on the Company’s financial statements.

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” ASU 2016-16 provides guidance stating that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 was adopted on January 1, 2018 and did not have a significant impact on the Company’s financial statements and no prior periods were adjusted.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 was adopted on January 1, 2018 and did not 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 requires 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. ASU 2016-01 also emphasizes the existing requirement to use exit prices to measure fair value for disclosure purposes and clarifies that entities should not make use of a practicability exception in determining the fair value of loans. Accordingly, we refined the calculation used to determine the disclosed fair value of the Company’s loans held for investment as part of adopting this standard. The refined calculation did not have a significant impact on the Company’s fair value disclosures. ASU 2016-01 was adopted on January 1, 2018 and did not have a significant impact on the Company’s financial statements.

In January 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customer (Topic 606).” ASU 2014-09 implements a comprehensive new revenue recognition standard that will supersede substantially all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in a manner that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, which comprises a significant portion of the Company’s revenue stream. ASU 2014-09 was adopted on January 1, 2018 and did not have a significant impact on the Company’s financial statements.

Standards Not Yet Adopted:

In June 2016, the FASB issued 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 for the Company on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on its financial statements. In that regard, the Company has formed a task force under the direction of its Chief Financial Officer. The Company is currently developing an implementation plan to include assessment of process, portfolio segmentation, model development, system requirements and the identification of data and resource need, among other things.

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 effect on the Company’s financial statements.

 

 

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

 

On January 11, 2018, the Company acquired First Wagoner Corp. and its subsidiary bank, First Bank & Trust Company, with locations in Carney, Grove, Ketchum, Luther, Tulsa and Wagoner. First Bank & Trust Company had approximately $290 million in total assets, $247 million in loans, $251 million in deposits and $36 million in equity capital. First Bank & Trust Company operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on February 16, 2018. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $6.3 million and goodwill of approximately $19.1 million. These fair value estimates are considered preliminary and are subject to change for up to one year after the closing date of the acquisition as additional information becomes available. The effect of this acquisition was included in the consolidated financial statements of the

7


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 First Wagoner Corp. and its subsidiary bank, First Bank & Trust Company complements the Company’s community banking strategy by adding five communities to its banking network in Oklahoma.

 

On January 11, 2018, the Company acquired First Chandler Corp. and its subsidiary bank, First Bank of Chandler, with two locations in Chandler. First Bank of Chandler had approximately $88 million in total assets, $66 million in loans, $79 million in deposits and $11 million in equity capital. The bank will operate as First Bank of Chandler until it is merged into BancFirst, which is expected to be during the third quarter of 2018. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $2.2 million and goodwill of approximately $6.7 million. These fair value estimates are considered preliminary and are subject to change for up to one year after the closing date of the acquisition as additional information becomes available. 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 First Chandler Corp. and its subsidiary bank, First Bank of Chandler complements the Company’s community banking strategy by increasing its banking network in Oklahoma.

 

On July 31, 2017, the Company completed a two-for-one stock split of the Company’s outstanding shares of common stock. The stock was payable in the form of a dividend on or about July 31, 2017 to shareholders of record of the outstanding common stock as of the close of business record date of July 17, 2017.  Stockholders received one additional share for each share held on that date. This was the second stock split for the Company since going public. All share and per share amounts in these consolidated financial statements and related notes have been retroactively adjusted to reflect this stock split for all periods presented.

 

 

(3)

SECURITIES

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

 

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

(Dollars in thousands)

 

Held for investment, at cost (fair value: $2,086 and $2,303, respectively)

 

$

2,079

 

 

$

2,292

 

Available for sale, at fair value

 

 

491,022

 

 

 

467,703

 

Total

 

$

493,101

 

 

$

469,995

 

 

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

 

March 31, 2018

 

(Dollars in thousands)

 

Mortgage backed securities (1)

 

$

174

 

 

$

7

 

 

$

 

 

$

181

 

States and political subdivisions

 

 

1,405

 

 

 

1

 

 

 

(1

)

 

 

1,405

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

2,079

 

 

$

8

 

 

$

(1

)

 

$

2,086

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage backed securities (1)

 

$

187

 

 

$

10

 

 

$

 

 

$

197

 

States and political subdivisions

 

 

1,605

 

 

 

3

 

 

 

(2

)

 

 

1,606

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

2,292

 

 

$

13

 

 

$

(2

)

 

$

2,303

 

8


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

 

March 31, 2018

 

(Dollars in thousands)

 

U.S. treasuries

 

$

344,978

 

 

$

74

 

 

$

(3,803

)

 

$

341,249

 

U.S. federal agencies

 

 

86,172

 

 

 

11

 

 

 

(283

)

 

 

85,900

 

Mortgage backed securities (1)

 

 

18,114

 

 

 

165

 

 

 

(594

)

 

 

17,685

 

States and political subdivisions

 

 

39,654

 

 

 

412

 

 

 

(143

)

 

 

39,923

 

Other securities (2)

 

 

7,088

 

 

 

71

 

 

 

(894

)

 

 

6,265

 

Total

 

$

496,006

 

 

$

733

 

 

$

(5,717

)

 

$

491,022

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

314,905

 

 

$

 

 

$

(2,103

)

 

$

312,802

 

U.S. federal agencies

 

 

89,098

 

 

 

82

 

 

 

(329

)

 

 

88,851

 

Mortgage backed securities (1)

 

 

18,358

 

 

 

204

 

 

 

(586

)

 

 

17,976

 

States and political subdivisions

 

 

41,937

 

 

 

554

 

 

 

(121

)

 

 

42,370

 

Other securities (2)

 

 

6,527

 

 

 

71

 

 

 

(894

)

 

 

5,704

 

Total

 

$

470,825

 

 

$

911

 

 

$

(4,033

)

 

$

467,703

 

 

 

(1)

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

 

(2)

Primarily consists of equity securities.

 

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.

 

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

 

(Dollars in thousands)

 

Held for Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual maturity of debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

1,036

 

 

$

1,036

 

 

$

1,036

 

 

$

1,034

 

After one year but within five years

 

 

422

 

 

 

422

 

 

 

623

 

 

 

627

 

After five years but within ten years

 

 

613

 

 

 

620

 

 

 

625

 

 

 

633

 

After ten years

 

 

8

 

 

 

8

 

 

 

8

 

 

 

9

 

Total

 

$

2,079

 

 

$

2,086

 

 

$

2,292

 

 

$

2,303

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual maturity of debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

162,621

 

 

$

162,261

 

 

$

113,225

 

 

$

112,974

 

After one year but within five years

 

 

268,010

 

 

 

264,525

 

 

 

289,038

 

 

 

287,058

 

After five years but within ten years

 

 

5,616

 

 

 

5,819

 

 

 

6,222

 

 

 

6,500

 

After ten years

 

 

52,671

 

 

 

52,152

 

 

 

55,813

 

 

 

55,467

 

Total debt securities

 

 

488,918

 

 

 

484,757

 

 

 

464,298

 

 

 

461,999

 

Equity securities

 

 

7,088

 

 

 

6,265

 

 

 

6,527

 

 

 

5,704

 

Total

 

$

496,006

 

 

$

491,022

 

 

$

470,825

 

 

$

467,703

 

The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:

 

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

(Dollars in thousands)

 

Book value of pledged securities

 

$

414,121

 

 

$

440,069

 

 

 

9


(4)

LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

 

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

 

(Dollars in thousands)

 

Commercial and financial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,045,706

 

 

 

20.98

%

 

$

995,207

 

 

 

21.08

%

Oil & gas production and equipment

 

 

91,051

 

 

 

1.83

 

 

 

95,574

 

 

 

2.02

 

Agriculture

 

 

142,146

 

 

 

2.85

 

 

 

141,249

 

 

 

2.99

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

70,932

 

 

 

1.42

 

 

 

73,827

 

 

 

1.56

 

Tax-exempt

 

 

51,765

 

 

 

1.04

 

 

 

48,626

 

 

 

1.03

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

445,744

 

 

 

8.94

 

 

 

437,277

 

 

 

9.26

 

Farmland

 

 

220,882

 

 

 

4.43

 

 

 

195,162

 

 

 

4.13

 

One to four family residences

 

 

966,006

 

 

 

19.38

 

 

 

875,766

 

 

 

18.55

 

Multifamily residential properties

 

 

59,469

 

 

 

1.19

 

 

 

46,030

 

 

 

0.98

 

Commercial

 

 

1,555,340

 

 

 

31.21

 

 

 

1,487,927