banf-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2021

☐	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, Oklahoma City, Oklahoma		73102-8405
(Address of principal executive offices)		(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 Par Value Per Share

BANF

NASDAQ Global Select Market System

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 every Interactive Data File required to be submitted 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 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	☐	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, 2021 there were 32,775,013 shares of the registrant’s Common Stock outstanding.

BancFirst Corporation

Quarterly Report on Form 10-Q

March 31, 2021

Table of Contents

Item		Page
	PART I – Financial Information
1.	Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flow	5

	Notes to Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
3.	Quantitative and Qualitative Disclosure About Market Risk	36
4.	Controls and Procedures	36

	PART II – Other Information
1.	Legal Proceedings	37
1A.	Risk Factors	37
2.	Unregistered Sales of Equity Securities	37
3.	Defaults Upon Senior Securities	37
4.	Mine Safety Disclosures	37
5.	Other Information	37
6.	Exhibits	38
Signatures		40

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	March 31,			December 31,
		2021			2020
	(unaudited)			(see Note 1)
ASSETS
Cash and due from banks	$	274,092		$	280,518
Interest-bearing deposits with banks		2,788,316			1,336,394
Debt securities held for investment (fair value: $2,953 and $2,984, respectively)		2,956			2,964
Debt securities available for sale at fair value		517,587			552,232
Loans held for sale		21,718			53,719
Loans held for investment (net of unearned interest)		6,358,390			6,394,506
Allowance for credit losses		(90,860	)		(91,366	)
Loans, net of allowance for credit losses		6,267,530			6,303,140
Premises and equipment, net		263,452			261,677
Other real estate owned		30,167			32,179
Intangible assets, net		18,206			18,999
Goodwill		149,922			149,922
Accrued interest receivable and other assets		215,359			220,613
Total assets	$	10,549,305		$	9,212,357

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	4,276,145		$	3,790,900
Interest-bearing		5,095,795			4,273,804
Total deposits		9,371,940			8,064,704
Short-term borrowings		3,750			1,100
Accrued interest payable and other liabilities		52,140			51,864
Junior subordinated debentures		26,804			26,804
Total liabilities		9,454,634			8,144,472

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: 32,771,013 and 32,719,852, respectively		32,771			32,720
Capital surplus		157,450			156,574
Retained earnings		898,026			871,161
Accumulated other comprehensive income, net of income tax of $2,177 and $2,513, respectively		6,424			7,430
Total stockholders' equity		1,094,671			1,067,885
Total liabilities and stockholders' equity	$	10,549,305		$	9,212,357

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended
	March 31,
		2021			2020
INTEREST INCOME
Loans, including fees	$	77,662		$	76,518
Securities:
Taxable		1,693			2,586
Tax-exempt		70			98
Interest-bearing deposits with banks		595			4,769
Total interest income		80,020			83,971
INTEREST EXPENSE
Deposits		2,322			9,400
Short-term borrowings		1			7
Junior subordinated debentures		491			491
Total interest expense		2,814			9,898
Net interest income		77,206			74,073
Provision for credit losses		—			19,583
Net interest income after provision for credit losses		77,206			54,490
NONINTEREST INCOME
Trust revenue		3,102			3,655
Service charges on deposits		19,100			18,804
Securities transactions (includes no accumulated other comprehensive income reclassifications)		95			50
Income from sales of loans		2,010			781
Insurance commissions		5,989			5,676
Cash management		3,003			4,320
Gain on sale of other assets		2,639			86
Other		3,997			1,773
Total noninterest income		39,935			35,145
NONINTEREST EXPENSE
Salaries and employee benefits		39,577			39,756
Occupancy, net		4,348			3,546
Depreciation		3,877			3,491
Amortization of intangible assets		793			964
Data processing services		1,678			1,692
Net loss/(income) from other real estate owned		1,510			(2,135	)
Marketing and business promotion		1,879			2,355
Deposit insurance		876			136
Other		10,425			11,580
Total noninterest expense		64,963			61,385
Income before taxes		52,178			28,250
Income tax expense		9,658			5,642
Net income	$	42,520		$	22,608
NET INCOME PER COMMON SHARE
Basic	$	1.30		$	0.69
Diluted	$	1.27		$	0.68
OTHER COMPREHENSIVE (LOSS) GAIN
Unrealized (losses)/gains on securities, net of tax of $336 and $(2,176) respectively		(1,006	)		6,425
Comprehensive income	$	41,514		$	29,033

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	March 31,
	2021			2020
COMMON STOCK
Issued at beginning of period	$	32,720		$	32,694
Shares issued for stock options		51			12
Shares acquired and canceled		—			(59	)
Issued at end of period	$	32,771		$	32,647
CAPITAL SURPLUS
Balance at beginning of period	$	156,574		$	153,353
Common stock issued for stock options		1,258			220
Net cash settlement of options		(958	)		—
Stock-based compensation arrangements		576			426
Balance at end of period	$	157,450		$	153,999
RETAINED EARNINGS
Balance at beginning of period	$	871,161		$	815,488
Net income		42,520			22,608
Cumulative effect of change in accounting principle, net of tax of $925 (Note 2)		—			2,270
Dividends on common stock ($0.34 and $0.32 per share, respectively)		(11,134	)		(10,472	)
Net cash settlement of options		(4,521	)		—
Common stock acquired and canceled		—			(3,039	)
Balance at end of period	$	898,026		$	826,855
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized (losses)/gains on securities:
Balance at beginning of period	$	7,430		$	3,454
Net change		(1,006	)		6,425
Balance at end of period	$	6,424		$	9,879
Total stockholders’ equity	$	1,094,671		$	1,023,380

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

	Three Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	42,520		$	22,608
Adjustments to reconcile to net cash provided by operating activities:
Provision for credit losses		—			19,583
Depreciation and amortization		4,670			4,455
Net amortization of securities premiums and discounts		369			(461	)
Realized securities gains		(95	)		(50	)
Gain on sales of loans		(2,010	)		(781	)
Cash receipts from the sale of loans originated for sale		114,517			56,879
Cash disbursements for loans originated for sale		(98,043	)		(61,258	)
Deferred income tax benefit		(738	)		(1,211	)
Gain on sale of other assets		(2,584	)		(2,183	)
Decrease in interest receivable		235			196
Decrease in interest payable		(329	)		(543	)
Amortization of stock-based compensation arrangements		576			426
Excess tax benefit from stock-based compensation arrangements		(1,551	)		(95	)
Other, net		10,833			(2,302	)
Net cash provided by operating activities		68,370			35,263
INVESTING ACTIVITIES
Net cash received from acquisitions, net of cash paid		—			18,397
Net cash paid from sale of assets and liabilities, net of cash received		(13,733	)		—
Net increase in federal funds sold		—			1,000
Purchases of held for investment debt securities		—			(295	)
Purchases of available for sale debt securities		(210,662	)		(234,059	)
Proceeds from maturities, calls and paydowns of held for investment debt securities		7			237
Proceeds from maturities, calls and paydowns of available for sale debt securities		243,597			142,818
Purchase of equity securities		(171	)		(39	)
Proceeds from paydowns and sales of equity securities		194			408
Net change in loans		32,053			(308,102	)
Purchases of premises, equipment and computer software		(7,718	)		(11,349	)
Purchase of tax credits		(1,262	)		(219	)
Other, net		2,858			4,988
Net cash provided by (used in) investing activities		45,163			(386,215	)
FINANCING ACTIVITIES
Net change in deposits		1,344,608			44,559
Net change in short-term borrowings		2,650			300
Issuance of common stock in connection with stock options, net		1,309			232
Common stock acquired		—			(3,098	)
Net cash settlement of options		(5,479	)		—
Cash dividends paid		(11,125	)		(10,462	)
Net cash provided by financing activities		1,331,963			31,531
Net increase/(decrease) in cash, due from banks and interest-bearing deposits		1,445,496			(319,421	)
Cash, due from banks and interest-bearing deposits at the beginning of the period		1,616,912			1,868,281
Cash, due from banks and interest-bearing deposits at the end of the period	$	3,062,408		$	1,548,860
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	3,155		$	10,410
Cash paid during the period for income taxes	$	1,300		$	1,175
Noncash investing and financing activities:
Fair value of assets acquired in acquisitions	$	—		$	47,838
Liabilities assumed in acquisitions	$	—		$	45,040
Unpaid common stock dividends declared	$	11,134		$	10,463

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

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 States 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, 2020.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc., BFTower, LLC, BFC-PNC LLC, 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 U.S. GAAP for interim financial information and the instructions for Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). 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, 2020, 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.

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 credit 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.

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

On February 19, 2021, the Company entered into a purchase and assumption agreement with The First National Bank and Trust Company of Vinita, Oklahoma to purchase certain of its assets and assume its deposits and certain other obligations. The First National Bank and Trust Company of Vinita is a nationally chartered bank with banking locations in Vinita and Grove, Oklahoma. These banking locations would become branches of BancFirst. As of December 31, 2020, the First National Bank and Trust Company of Vinita had approximately $285 million in total assets, $209 million in loans, and $258 million in deposits. The purchase and assumption is expected to be completed during the second quarter of 2021 and is subject to regulatory approval.

On January 22, 2021, the Company sold approximately $21 million in loans and approximately $38 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma. A gain on the transaction of $2.5 million is reflected in the first quarter of 2021.

(3)	SECURITIES

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

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Estimated

Fair

Value