UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended September 30, 2013

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, 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  ¨.

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  ¨.

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   x
Non-accelerated filer   ¨ (Do not check if a smaller reporting company)    Smaller reporting company   ¨

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

As of October 31, 2013 there were 15,303,372 shares of the registrant’s Common Stock outstanding.

 

 

 


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     September 30,
2013
    December 31,
2012
    September 30,
2012
 
     (unaudited)     (see Note 1)     (unaudited)  

ASSETS

      

Cash and due from banks

   $ 204,317      $ 213,103      $ 139,004   

Interest-bearing deposits with banks

     1,622,619        1,732,045        1,773,610   

Federal funds sold

     —          700        —     

Securities (fair value: $474,755, $562,815, and $540,786, respectively)

     474,640        562,542        540,475   

Loans:

      

Total loans (net of unearned interest)

     3,358,938        3,242,427        3,116,096   

Allowance for loan losses

     (38,859     (38,725     (37,258
  

 

 

   

 

 

   

 

 

 

Loans, net

     3,320,079        3,203,702        3,078,838   

Premises and equipment, net

     118,176        115,503        113,812   

Other real estate owned

     8,121        9,227        9,559   

Intangible assets, net

     10,633        12,083        12,630   

Goodwill

     44,545        44,545        44,545   

Accrued interest receivable and other assets

     123,600        128,800        124,278   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 5,926,730      $ 6,022,250      $ 5,836,751   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

      

Deposits:

      

Noninterest-bearing

   $ 2,022,388      $ 2,016,832      $ 1,927,387   

Interest-bearing

     3,287,076        3,423,998        3,326,118   
  

 

 

   

 

 

   

 

 

 

Total deposits

     5,309,464        5,440,830        5,253,505   

Short-term borrowings

     5,074        4,571        5,665   

Long-term borrowings

     8,938        9,178        11,255   

Accrued interest payable and other liabilities

     30,477        21,300        29,135   

Junior subordinated debentures

     26,804        26,804        26,804   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     5,380,757        5,502,683        5,326,364   
  

 

 

   

 

 

   

 

 

 

Commitments and contingent liabilities

      

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: 15,298,035, 15,242,308 and 15,200,468, respectively

     15,298        15,242        15,200   

Capital surplus

     86,967        82,401        80,750   

Retained earnings

     439,840        415,607        407,732   

Accumulated other comprehensive income, net of income tax of $2,083, $3,400 and $3,609, respectively

     3,868        6,317        6,705   
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     545,973        519,567        510,387   
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 5,926,730      $ 6,022,250      $ 5,836,751   
  

 

 

   

 

 

   

 

 

 

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     Nine Months Ended  
     September 30,     September 30,  
     2013     2012     2013     2012  

INTEREST INCOME

        

Loans, including fees

   $ 41,694      $ 42,026      $ 124,361      $ 125,843   

Securities:

        

Taxable

     1,097        1,681        3,745        6,175   

Tax-exempt

     284        366        944        1,201   

Federal funds sold

     —          —          2        1   

Interest-bearing deposits with banks

     1,031        1,071        2,978        3,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

     44,106        45,144        132,030        136,325   
  

 

 

   

 

 

   

 

 

   

 

 

 

INTEREST EXPENSE

        

Deposits

     2,849        3,729        8,778        11,861   

Short-term borrowings

     1        7        4        23   

Long-term borrowings

     52        84        176        280   

Junior subordinated debentures

     492        492        1,474        1,643   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

     3,394        4,312        10,432        13,807   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

     40,712        40,832        121,598        122,518   

Provision for loan losses

     (12     233        804        654   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     40,724        40,599        120,794        121,864   
  

 

 

   

 

 

   

 

 

   

 

 

 

NONINTEREST INCOME

        

Trust revenue

     2,122        1,927        6,043        5,457   

Service charges on deposits

     13,575        11,896        38,835        33,534   

Securities transactions

     90        385        341        4,643   

Income from sales of loans

     560        737        1,939        2,075   

Insurance commissions

     3,892        3,661        10,982        9,457   

Cash management

     1,620        1,971        4,669        5,951   

Gain on sale of other assets

     49        26        300        369   

Other

     1,744        1,513        4,811        4,431   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     23,652        22,116        67,920        65,917   
  

 

 

   

 

 

   

 

 

   

 

 

 

NONINTEREST EXPENSE

        

Salaries and employee benefits

     26,094        24,641        76,388        74,271   

Occupancy and fixed assets expense, net

     2,768        2,877        7,849        7,800   

Depreciation

     2,307        2,253        6,973        6,610   

Amortization of intangible assets

     424        457        1,291        1,371   

Data processing services

     1,173        1,208        3,587        3,649   

Net expense from other real estate owned

     105        200        870        1,369   

Marketing and business promotion

     1,668        1,998        4,631        5,332   

Deposit insurance

     750        745        2,235        2,188   

Other

     8,032        8,086        23,896        24,475   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

     43,321        42,465        127,720        127,065   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     21,055        20,250        60,994        60,716   

Income tax expense

     6,564        6,390        20,538        21,122   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 14,491      $ 13,860      $ 40,456      $ 39,594   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME PER COMMON SHARE

        

Basic

   $ 0.94      $ 0.91      $ 2.65      $ 2.61   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.93      $ 0.90      $ 2.61      $ 2.57   
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER COMPREHENSIVE INCOME

        

Unrealized losses on securities, net of tax of $186, $44, $1,269 and $654, respectively

   $ (346   $ (82   $ (2,360   $ (1,214

Reclassification adjustment for gains included in net income, net of tax of $6, $93, $48 and $821, respectively

     (11     (172     (89     (1,525
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss, net of tax of $192, $137, $1,317 and $1,475, respectively

     (357     (254     (2,449     (2,739
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income

   $ 14,134      $ 13,606      $ 38,007      $ 36,855   
  

 

 

   

 

 

   

 

 

   

 

 

 

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
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

COMMON STOCK

        

Issued at beginning of period

   $ 15,256      $ 15,154      $ 15,242      $ 15,118   

Shares issued

     63        46        122        89   

Shares acquired and canceled

     (21     —          (66     (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Issued at end of period

   $ 15,298      $ 15,200      $ 15,298      $ 15,200   
  

 

 

   

 

 

   

 

 

   

 

 

 

CAPITAL SURPLUS

        

Balance at beginning of period

   $ 84,360      $ 79,181      $ 82,401      $ 77,462   

Common stock issued

     1,717        748        2,745        1,470   

Tax effect of stock options

     491        430        727        629   

Stock-based compensation arrangements

     399        391        1,094        1,189   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 86,967      $ 80,750      $ 86,967      $ 80,750   
  

 

 

   

 

 

   

 

 

   

 

 

 

RETAINED EARNINGS

        

Balance at beginning of period

   $ 431,120      $ 398,267      $ 415,607      $ 381,017   

Net income

     14,491        13,860        40,456        39,594   

Dividends on common stock

     (4,746     (4,395     (13,579     (12,630

Common stock acquired and canceled

     (1,025     —          (2,644     (249
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 439,840      $ 407,732      $ 439,840      $ 407,732   
  

 

 

   

 

 

   

 

 

   

 

 

 

ACCUMULATED OTHER COMPREHENSIVE INCOME

        

Unrealized gains (losses) on securities:

        

Balance at beginning of period

   $ 4,225      $ 6,959      $ 6,317      $ 9,444   

Net change

     (357     (254     (2,449     (2,739
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 3,868      $ 6,705      $ 3,868      $ 6,705   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

   $ 545,973      $ 510,387      $ 545,973      $ 510,387   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

 

4


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

 

     Nine Months Ended  
     September 30,  
     2013     2012  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net income

   $ 40,456      $ 39,594   

Adjustments to reconcile to net cash provided by operating activities:

    

Provision for loan losses

     804        654   

Depreciation and amortization

     8,264        7,981   

Net amortization of securities premiums and discounts

     1,278        1,093   

Realized securities gains

     (341     (4,643

Gain on sales of loans

     (1,939     (2,075

Cash receipts from the sale of loans originated for sale

     165,988        169,065   

Cash disbursements for loans originated for sale

     (157,149     (170,446

Deferred income tax provision

     1,789        426   

Gain on other assets

     (236     (323

Decrease in interest receivable

     1,175        1,996   

Decrease in interest payable

     (324     (559

Amortization of stock-based compensation arrangements

     1,094        1,189   

Other, net

     9,641        3,936   
  

 

 

   

 

 

 

Net cash provided by operating activities

     70,500        47,888   
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Net decrease in Federal funds sold

     700        400   

Purchases of held for investment securities

     (902     (2,525

Purchases of available for sale securities

     (78,042     (58,240

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

     5,590        8,262   

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

     156,212        121,206   

Proceeds from sales of available for sale securities

     341        5,094   

Purchases of loans

     (40,847     (22,215

Proceeds from sales of loans

     87,764        32,569   

Net other increase in loans

     (173,231     (112,844

Purchases of premises, equipment and computer software

     (10,753     (9,290

Proceeds from the sale of other assets

     3,515        8,245   
  

 

 

   

 

 

 

Net cash used in investing activities

     (49,653     (29,338
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Net (decrease) increase in demand, transaction and savings deposits

     (70,008     274,556   

Net decrease in time deposits

     (61,358     (58,786

Net increase (decrease) in short-term borrowings

     503        (2,609

Paydown of long-term borrowings

     (240     (7,221

Redemption of junior subordinated debentures

     —          (9,279

Issuance of common stock

     3,594        2,188   

Common stock acquired

     (2,710     (256

Cash dividends paid

     (8,840     (12,262
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (139,059     186,331   
  

 

 

   

 

 

 

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

     (118,212     204,881   

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

     1,945,148        1,707,733   
  

 

 

   

 

 

 

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

   $ 1,826,936      $ 1,912,614   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    

Cash paid during the period for interest

   $ 10,756      $ 14,366   
  

 

 

   

 

 

 

Cash paid during the period for income taxes

   $ 18,646      $ 21,475   
  

 

 

   

 

 

 

Noncash investing and financing activities:

    

Unpaid common stock dividends declared

   $ 4,739      $ 4,397   
  

 

 

   

 

 

 

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 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, 2012.

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., BancFirst Agency, Inc. and BancFirst Community Development 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 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, 2012, should be referred to in connection with these unaudited interim consolidated financial statements.

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, 2012, 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.

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.

Recent Accounting Pronouncements

In February 2013, the FASB issued ASU No. 2013-02, “Comprehensive Income (Topic 220).” ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. An entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The new standard was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2012. Adoption of ASU 2013-02 did not have a significant effect on the Company’s financial statements.

In July 2012, the FASB issued ASU No. 2012-02, “Intangibles (Topic 350)—Goodwill and Other.” ASU 2012-02 simplifies the impairment test for indefinite-lived intangible assets other than goodwill. The new guidance gives the option to first assess qualitative factors to determine if it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount as a basis for determining whether it is necessary to

 

6


perform a quantitative valuation test. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning on or after September 15, 2012. Adoption of ASU 2012-02 did not have a significant effect on the Company’s financial statements.

In November 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210)—Disclosure about Offsetting Assets and Liabilities.” ASU 2011-11 is an amendment to require an entity to disclose both net and gross information about offsetting assets and liabilities to enable users of its financial statements to understand the effect of those arrangements. Arrangements include derivatives, sale and repurchase agreements and transactions, securities borrowing and securities lending arrangements. ASU 2011-11 was effective for annual and interim periods beginning on January 1, 2013 and did not have a significant effect on the Company’s financial statements.

 

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

On January 19, 2012, Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst, completed the sale of one of its investments that resulted in a pretax gain of approximately $4.5 million. After related expenses and income taxes, the increase in net income approximated $2.6 million. The gain was included in first quarter 2012 earnings.

 

(3) SECURITIES

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

 

     September 30, 2013  
     (Dollars in thousands)  

Held for investment, at cost (fair value: $12,328)

   $ 12,213   

Available for sale, at fair value

     462,427   
  

 

 

 

Total

   $ 474,640   
  

 

 

 

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

 

     September 30, 2013  
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Estimated
Fair
Value
 
     (Dollars in thousands)  

Mortgage backed securities (1)

   $ 649       $ 52       $ —        $ 701   

States and political subdivisions

     11,564         71         (8     11,627   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 12,213       $ 123       $ (8   $ 12,328   
  

 

 

    

 

 

    

 

 

   

 

 

 

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

 

     September 30, 2013  
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Estimated
Fair
Value
 
     (Dollars in thousands)  

U.S. treasury and other Federal agencies

   $ 359,076       $ 2,043       $ (215   $ 360,904   

Mortgage backed securities (1)

     33,336         620         —          33,956   

States and political subdivisions

     52,013         1,436         (63     53,386   

Other securities (2)

     12,051         2,270         (140     14,181   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 456,476       $ 6,369       $ (418   $ 462,427   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.
(2) Primarily consists of equity securities.

 

7


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.

 

     September 30, 2013  
     Amortized
Cost
     Estimated
Fair
Value
 
     (Dollars in thousands)  

Held for Investment

     

Contractual maturity of debt securities:

     

Within one year

   $ 3,636       $ 3,655   

After one year but within five years

     7,364         7,399   

After five years but within ten years

     945         976   

After ten years

     268         298   
  

 

 

    

 

 

 

Total

   $ 12,213       $ 12,328   
  

 

 

    

 

 

 

Available for Sale

     

Contractual maturity of debt securities:

     

Within one year

   $ 197,037       $ 197,424   

After one year but within five years

     119,341         120,593   

After five years but within ten years

     31,322         32,035   

After ten years

     100,124         101,615   
  

 

 

    

 

 

 

Total debt securities

     447,824         451,667   

Equity securities

     8,652         10,760   
  

 

 

    

 

 

 

Total

   $ 456,476       $ 462,427   
  

 

 

    

 

 

 

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:

 

     September 30, 2013  
     (Dollars in thousands)  

Book value of pledged securities

   $ 393,329   

 

8


(4) LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

 

     September 30, 2013     December 31, 2012     September 30, 2012  
     Amount      Percent     Amount      Percent     Amount      Percent  
     (Dollars in thousands)  

Commercial and industrial

   $ 566,670         16.87   $ 559,274         17.25   $ 541,130         17.37

Oil & gas production & equipment

     139,605         4.16        154,380         4.76        131,642         4.22   

Agriculture

     89,258         2.66        93,274         2.88        83,146         2.67   

State and political subdivisions:

               

Taxable

     10,248         0.31        9,412         0.29        7,786         0.25   

Tax-exempt

     12,232         0.36        13,194         0.41        13,749         0.44   

Real estate:

               

Construction

     283,468         8.44        226,102         6.97        211,505         6.79   

Farmland

     133,397         3.97        125,033         3.86        114,043         3.66   

One to four family residences

     696,651         20.74        669,230         20.64        674,457         21.64   

Multifamily residential properties

     57,825         1.72        50,721         1.56        50,659         1.63   

Commercial

     1,100,544         32.76        1,068,445         32.95        1,026,097         32.93   

Consumer

     248,025         7.38        253,002         7.80        241,864         7.76   

Other (not classified above)

     21,015         0.63        20,360         0.63        20,018         0.64   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans

   $ 3,358,938         100.00   $ 3,242,427         100.00   $ 3,116,096         100.00
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Loans held for sale (included above)

   $ 4,934         $ 11,257         $ 13,384      
  

 

 

      

 

 

      

 

 

    

The Company’s loans are mostly to customers within Oklahoma and over 60% of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral.

Accounting policies related to appraisals, nonaccruals and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Nonperforming and Restructured Assets

Nonaccrual loans, accruing loans past due 90 days or more, and restructured loans are shown in the table below. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.3 million for the nine months ended September 30, 2013 and approximately $1.0 million for the nine months ended September 30, 2012.

At September 30, 2013 and 2012, restructured loans consisted primarily of one loan restructured to defer principal payments. The loan was evaluated by management and determined to be well collateralized. Additionally, none of the concessions granted involved a principal reduction or a change from the current market rate of interest. The collateral value will be monitored periodically to evaluate possible impairment. The Company charges interest on principal balances outstanding during deferral periods. As a result, the current and future financial effects of the recorded balance of loans considered to be restructured were not considered to be material.

 

9


The following is a summary of nonperforming and restructured assets:

 

     September 30,     December 31,     September 30,  
     2013     2012     2012  
     (Dollars in thousands)  

Past due 90 days or more and still accruing

   $ 1,266      $ 537      $ 731   

Nonaccrual

     15,094        20,549        22,101   

Restructured

     18,028        17,866        17,784   
  

 

 

   

 

 

   

 

 

 

Total nonperforming and restructured loans

     34,388        38,952        40,616   

Other real estate owned and repossessed assets

     8,428        9,566        9,796   
  

 

 

   

 

 

   

 

 

 

Total nonperforming and restructured assets

   $ 42,816      $ 48,518      $ 50,412   
  

 

 

   

 

 

   

 

 

 

Nonperforming and restructured loans to total loans

     1.02     1.20     1.30
  

 

 

   

 

 

   

 

 

 

Nonperforming and restructured assets to total assets

     0.72     0.81     0.86
  

 

 

   

 

 

   

 

 

 

Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate the allowance for loan losses.

The following table is a summary of amounts included in nonaccrual loans, segregated by class of loans. Residential real estate refers to one-to-four family real estate.

 

     September 30,
2013
     September 30,
2012
 
     (Dollars in thousands)  

Non-residential real estate owner occupied

   $ 551       $ 5,605   

Non-residential real estate other

     6,784         3,719   

Residential real estate permanent mortgage

     714         585   

Residential real estate all other

     1,865         3,594   

Non-consumer non-real estate

     1,280         2,527   

Consumer non-real estate

     124         138   

Other loans

     1,446         2,221   

Acquired loans

     2,330         3,712   
  

 

 

    

 

 

 

Total

   $ 15,094       $ 22,101   
  

 

 

    

 

 

 

The following table presents an age analysis of past due loans, segregated by class of loans:

 

     Age Analysis of Past Due Loans  
     30-89
Days Past
Due
     90 Days
and

Greater
     Total Past
Due Loans
     Current
Loans
     Total Loans      Accruing
Loans

90 Days
or More
Past Due
 
     (Dollars in thousands)  

As of September 30, 2013

  

Non-residential real estate owner occupied

   $ 779       $ 326       $ 1,105       $ 458,241       $ 459,346       $ 308   

Non-residential real estate other

     6,046         1,925         7,971         869,531         877,502         51   

Residential real estate permanent mortgage

     2,017         492         2,509         253,708         256,217         217   

Residential real estate all other

     1,900         1,401         3,301         547,849         551,150         32   

Non-consumer non-real estate

     889         1,013         1,902         776,576         778,478         138   

Consumer non-real estate

     2,179         194         2,373         222,122         224,495         187   

Other loans

     1,531         1,275         2,806         136,060         138,866         236   

Acquired loans

     1,194         473         1,667         71,217         72,884         97   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 16,535       $ 7,099       $ 23,634       $ 3,335,304       $ 3,358,938       $ 1,266   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

10


As of September 30, 2012

                 

Non-residential real estate owner occupied

   $ 915       $ 466       $ 1,381       $ 480,319       $ 481,700       $ 349   

Non-residential real estate other

     646         1,959         2,605         665,265         667,870         —     

Residential real estate permanent mortgage

     2,058         399         2,457         242,209         244,666         12   

Residential real estate all other

     1,635         771         2,406         490,726         493,132         86   

Non-consumer non-real estate

     4,233         135         4,368         729,538         733,906         7   

Consumer non-real estate

     2,050         230         2,280         205,463         207,743         170   

Other loans

     1,706         1,447         3,153         147,329         150,482         43   

Acquired loans

     1,219         1,061         2,280         134,317         136,597         64   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 14,462       $ 6,468       $ 20,930       $ 3,095,166       $ 3,116,096       $ 731   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect the full amount of scheduled principal and interest payments in accordance with the original contractual terms of the loan agreement. If a loan is impaired, a specific valuation allowance may be allocated if necessary so that the loan is reported, net of allowance for loss, at the present value of future cash flows using the loan’s existing rate, or the fair value of collateral if repayment is expected solely from the collateral.

The following table presents impaired loans, segregated by class of loans. No material amount of interest income was recognized on impaired loans subsequent to their classification as impaired.

 

     Impaired Loans  
     Unpaid
Principal
Balance
     Recorded
Investment

with Allowance
     Related
Allowance
     Average
Recorded
Investment
 
     (Dollars in thousands)  

As of September 30, 2013

  

Non-residential real estate owner occupied

   $ 993       $ 924       $ 34       $ 700   

Non-residential real estate other

     25,724         24,216         2,240         25,871   

Residential real estate permanent mortgage

     1,263         1,068         57         1,298   

Residential real estate all other

     2,423         2,020         381         3,668   

Non-consumer non-real estate

     1,931         1,599         396         1,508   

Consumer non-real estate

     413         394         67         444   

Other loans

     1,905         1,782         300         1,911   

Acquired loans

     9,879         7,853         95         8,109   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 44,531       $ 39,856       $ 3,570       $ 43,509   
  

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2012

           

Non-residential real estate owner occupied

   $ 7,058       $ 6,094       $ 232       $ 6,237   

Non-residential real estate other

     20,535         20,340         1,581         20,496   

Residential real estate permanent mortgage

     1,299         1,089         30         1,184   

Residential real estate all other

     4,365         4,047         1,344         4,149   

Non-consumer non-real estate

     3,144         2,539         677         1,745   

Consumer non-real estate

     447         424         77         364   

Other loans

     2,420         2,265         264         1,975   

Acquired loans

     12,872         10,684         71         11,451   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 52,140       $ 47,482       $ 4,276       $ 47,601   
  

 

 

    

 

 

    

 

 

    

 

 

 

Credit Risk Monitoring and Loan Grading

The Company considers various factors to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical loan loss experience, and economic conditions.

An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions.

 

11


The general characteristics of the risk grades are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The following table presents internal loan grading by class of loans:

 

     Internal Loan Grading  
     Grade  
     1      2      3      4      5      Total  
     (Dollars in thousands)  

As of September 30, 2013

  

Non-residential real estate owner occupied

   $ 388,923       $ 64,418       $ 5,189       $ 816       $ —         $ 459,346   

Non-residential real estate other

     714,670         134,760         21,237         6,835         —           877,502   

Residential real estate permanent mortgage

     224,518         25,091         5,574         1,034         —           256,217   

Residential real estate all other

     457,649         82,827         8,721         1,953         —           551,150   

Non-consumer non-real estate

     681,695         91,108         4,254         1,421         —           778,478   

Consumer non-real estate

     210,285         11,760         2,047         403         —           224,495   

Other loans

     135,169         2,646         738         313         —           138,866   

Acquired loans

     53,364         12,707         4,207         2,606         —           72,884   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,866,273       $ 425,317       $ 51,967       $ 15,381       $ —         $ 3,358,938   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of September 30, 2012

                 

Non-residential real estate owner occupied

   $ 420,426       $ 49,131       $ 6,189       $ 5,954       $ —         $ 481,700   

Non-residential real estate other

     564,180         78,637         21,334         3,719         —           667,870   

Residential real estate permanent mortgage

     206,702         31,558         5,547         859         —           244,666   

Residential real estate all other

     429,862         50,412         9,120         3,738         —           493,132   

Non-consumer non-real estate

     644,066         80,863         6,500         2,477         —           733,906   

Consumer non-real estate

     195,242         10,185         1,965         349         2         207,743   

Other loans

     146,037         2,726         887         832         —           150,482   

Acquired loans

     103,411         24,243         5,006         3,898         39         136,597   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,709,926       $ 327,755       $ 56,548       $ 21,826       $ 41       $ 3,116,096   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The allowance for loan losses (“ALL”) methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The following table details activity in the ALL by class of loans for the period presented. Allocation of a portion of the allowance to one class of loans does not preclude its availability to absorb losses in other classes.

 

     ALL  
     Balance at
beginning
of period
     Charge-
offs
    Recoveries      Net
charge

-offs
    Provisions
charged to
operations
    Balance
at end of
period
 
     (Dollars in thousands)  

Three Months Ended September 30, 2013

  

Non-residential real estate owner occupied

   $ 4,714       $ (1   $ —         $ (1   $ 144      $ 4,857   

Non-residential real estate other

     10,866         —          2         2        404        11,272   

Residential real estate permanent mortgage

     2,733         (30     12         (18     7        2,722   

Residential real estate all other

     7,349         (23     3         (20     (722     6,607   

 

12


Non-consumer non-real estate

     8,751         (34     110         76        36        8,863   

Consumer non-real estate

     2,389         (163     65         (98     207        2,498   

Other loans

     1,961         (76     24         (52     36        1,945   

Acquired loans

     219         (3     3         —          (124     95   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 38,982       $ (330   $ 219       $ (111   $ (12   $ 38,859   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Nine Months Ended September 30, 2013

              

Non-residential real estate owner occupied

   $ 5,104       $ (3   $ 16       $ 13      $ (260   $ 4,857   

Non-residential real estate other

     9,865         (19     12         (7     1,414        11,272   

Residential real estate permanent mortgage

     2,781         (126     27         (99     40        2,722   

Residential real estate all other

     7,034         (177     30         (147     (280     6,607   

Non-consumer non-real estate

     9,385         (139     159         20        (542     8,863   

Consumer non-real estate

     2,451         (458     202         (256     303        2,498   

Other loans

     1,885         (235     55         (180     240        1,945   

Acquired loans

     220         (53     39         (14     (111     95   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 38,725       $ (1,210   $ 540       $ (670   $ 804      $ 38,859   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

     ALL  
     Balance at
beginning
of period
     Charge-
offs
    Recoveries      Net
charge

-offs
    Provisions
charged to
operations
    Balance
at end of
period
 
     (Dollars in thousands)  

Three Months Ended September 30, 2012

              

Non-residential real estate owner occupied

   $ 5,783       $ (30   $ 2       $ (28   $ (469   $ 5,286   

Non-residential real estate other

     8,566         —          15         15        16        8,597   

Residential real estate permanent mortgage

     3,002         (50     4         (46     (258     2,698   

Residential real estate all other

     7,004         (107     5         (102     121        7,023   

Non-consumer non-real estate

     8,558         (119     19         (100     712        9,170   

Consumer non-real estate

     2,282         (117     42         (75     162        2,369   

Other loans

     1,854         (24     2         (22     6        1,838   

Acquired loans

     387         (53     —           (53     (57     277   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 37,436       $ (500   $ 89       $ (411   $ 233      $ 37,258   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Nine Months Ended September 30, 2012

              

Non-residential real estate owner occupied

   $ 5,300       $ (87   $ 2       $ (85   $ 71      $ 5,286   

Non-residential real estate other

     8,648         (71     46         (25     (26     8,597   

Residential real estate permanent mortgage

     2,734         (119     84         (35     (1     2,698   

Residential real estate all other

     7,030         (169     34         (135     128        7,023   

Non-consumer non-real estate

     9,156         (449     144         (305     319        9,170   

Consumer non-real estate

     2,315         (308     157         (151     205        2,369   

Other loans

     1,886         (231     33         (198     150        1,838   

Acquired loans

     587         (129     11         (118     (192     277   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total

   $ 37,656       $ (1,563   $ 511       $ (1,052   $ 654      $ 37,258   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

13


The following table details the amount of ALL by class of loans based on the impairment methodology used by the Company.

 

     ALL  
     September 30, 2013      September 30, 2012  
     Individually
evaluated for
impairment
     Collectively
evaluated for
impairment
     Individually
evaluated for
impairment
     Collectively
evaluated for
impairment
 
     (Dollars in thousands)  

Non-residential real estate owner occupied

   $ 228       $ 4,629       $ 462       $ 4,824   

Non-residential real estate other

     2,529         8,743         1,934         6,663   

Residential real estate permanent mortgage

     226         2,496         218         2,480   

Residential real estate all other

     1,058         5,549         2,087         4,936   

Non-consumer non-real estate

     1,052         7,811         1,692         7,478   

Consumer non-real estate

     314         2,184         315         2,054   

Other loans

     2460         1,6998         220         1,6188   

Acquired loans

     —           957         —           2777   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 5,653       $ 33,206       $ 6,928       $ 30,330   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table details the loans outstanding by class of loans based on the impairment methodology used by the Company.

 

     Loans  
     September 30, 2013      September 30, 2012  
     Individually
evaluated for
impairment
     Collectively
evaluated for
impairment
     Loans acquired
with
deteriorated
credit quality
     Individually
evaluated for
impairment
     Collectively
evaluated for
impairment
     Loans acquired
with
deteriorated
credit quality
 
     (Dollars in thousands)  

Non-residential real estate owner occupied

   $ 6,005       $ 453,341       $ —         $ 12,142       $ 469,558       $ —     

Non-residential real estate other

     28,072         849,430         —           25,053         642,817         —     

Residential real estate permanent mortgage

     6,609         249,609         —           6,406         238,260         —     

Residential real estate all other

     10,674         540,476         —           12,858         480,274         —     

Non-consumer non-real estate

     5,675         772,803         —           8,976         724,930         —     

Consumer non-real estate

     2,448         222,045         —           2,316         205,427         —     

Other loans

     292         138,575         —           264         150,218         —     

Acquired loans

     —           66,071         6,813         —           127,654         8,943   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 59,775       $ 3,292,350       $ 6,813       $ 68,015       $ 3,039,138       $ 8,943   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Transfers from Loans

Transfers from loans to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow.

Transfers from loans to other real estate owned and repossessed assets during the periods presented are summarized as follows:

 

     Nine Months Ended
September 30,
 
     2013      2012  
     (Dollars in thousands)  

Other real estate owned

   $ 1,287       $ 1,633   

Repossessed assets

     946         664   
  

 

 

    

 

 

 

Total

   $ 2,233       $ 2,297   
  

 

 

    

 

 

 

 

14


(5) INTANGIBLE ASSETS

The following is a summary of intangible assets:

 

     Gross
Carrying
Amount
     Accumulated
Amortization
    Net
Carrying
Amount
 
     (Dollars in thousands)  

As of September 30, 2013

  

Core deposit intangibles

   $ 13,473       $ (6,845   $ 6,628   

Customer relationship intangibles

     5,657         (2,247     3,410   

Mortgage servicing intangibles

     734         (139     595   
  

 

 

    

 

 

   

 

 

 

Total

   $ 19,864       $ (9,231   $ 10,633   
  

 

 

    

 

 

   

 

 

 

Additional information for intangible assets can be found in Note (7) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

(6) STOCK-BASED COMPENSATION

The Company adopted a nonqualified incentive stock option plan (the “BancFirst ISOP”) in May 1986. The Company amended the BancFirst ISOP to increase the number of shares to be issued under the plan to 3,000,000 shares in May 2013. At September 30, 2013, 185,860 shares were available for future grants. The BancFirst ISOP will terminate on December 31, 2014. The options vest and are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options expire at the end of fifteen years from the date of grant. Options outstanding as of September 30, 2013 will become exercisable through the year 2020. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

In June 1999, the Company adopted the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “BancFirst Directors’ Stock Option Plan”). Each non-employee director is granted an option for 10,000 shares. The Company amended the BancFirst Directors’ Stock Option Plan to increase the number of shares to be issued under the plan to 205,000 shares in May 2009. At September 30, 2013, 5,000 shares were available for future grants. The options vest and are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire at the end of fifteen years from the date of grant. Options outstanding as of September 30, 2013 will become exercisable through the year 2017. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

The Company currently uses newly issued shares for stock option exercises, but reserves the right to use shares purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future.

The following table is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:

 

     Options     Wgtd.
Avg.
Exercise
Price
     Wgtd. Avg.
Remaining
Contractual
Term
    Aggregate
Intrinsic
Value
 
     (Dollars in thousands, except per share data)  

Nine Months Ended September 30, 2013

         

Outstanding at December 31, 2012

     1,216,981      $ 31.98        

Options granted

     60,000        44.11        

Options exercised

     (118,414     25.13        

Options canceled, forfeited or expired

     (5,000     43.02        
  

 

 

        

Outstanding at September 30, 2013

     1,153,567        33.26         8.69  Yrs    $ 24,003   
  

 

 

      

 

 

   

 

 

 

Exercisable at September 30, 2013

     540,167        26.74         5.54  Yrs    $ 14,763   
  

 

 

      

 

 

   

 

 

 

 

15


The following table has additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  
     (Dollars in thousands, except per share data)  

Weighted average grant-date fair value per share of options granted

   $ 10.63       $ —         $ 9.05       $ —     

Total intrinsic value of options exercised

     1,424         1,152         2,653         2,180   

Cash received from options exercised

     1,775         794         2,976         1,516   

Tax benefit realized from options exercised

     551         446         1,026         843   

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility, and the expected term. The fair value of each option is expensed over its vesting period.

The following table is a summary of the Company’s recorded stock-based compensation expense:

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  
     (Dollars in thousands)  

Stock-based compensation expense

   $ 399      $ 391      $ 1,094      $ 1,189   

Tax benefit

     (154     (151     (423     (460
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based compensation expense, net of tax

   $ 245      $ 240      $ 671      $ 729   
  

 

 

   

 

 

   

 

 

   

 

 

 

The Company will continue to amortize the remaining fair value of stock options, over the remaining vesting period of approximately seven years. The following table shows the remaining fair value of stock options:

 

     September 30, 2013  
     (Dollars in thousands)  

Fair value of stock options

   $ 4,902   

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method:

 

     Nine Months Ended
September 30,
 
     2013     2012  

Risk-free interest rate

     2.70     1.74

Dividend yield

     2.00     2.00

Stock price volatility

     18.35     32.88

Expected term

     10  Yrs      10  Yrs 

The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company’s stock. The expected term is estimated from the historical option exercise experience.

 

(7) STOCKHOLDERS’ EQUITY

In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options, and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee.

 

16


The following table is a summary of the shares under the program:

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  
     2013      2012      2013      2012  

Number of shares repurchased

     —           —           40,241         6,787   

Average price of shares repurchased

   $ —         $ —         $ 40.88       $ 37.70   

Shares remaining to be repurchased

     194,723         234,964         194,723         234,964   

The Company and BancFirst are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and the FDIC. These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s and BancFirst’s assets, liabilities, and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s financial statements. Management believes that as of September 30, 2013 the Company and BancFirst met all capital adequacy requirements to which they are subject. The actual and required capital amounts and ratios are shown in the following table:

 

     Actual     For Capital
Adequacy
Purposes
    To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
 
     Amount      Ratio     Amount      Ratio     Amount      Ratio  
     (Dollars in thousands)  

As of September 30, 2013:

               

Total Capital

               

(to Risk Weighted Assets)-

               

BancFirst Corporation

   $ 552,380         14.72   $ 300,282         8.00     N/A         N/A   

BancFirst

     520,453         13.90     299,606         8.00   $ 374,507         10.00

Tier 1 Capital

               

(to Risk Weighted Assets)-

               

BancFirst Corporation

   $ 513,521         13.68   $ 150,141         4.00     N/A         N/A   

BancFirst

     481,594         12.86     149,803         4.00   $ 224,704         6.00

Tier 1 Capital

               

(to Total Assets)-

               

BancFirst Corporation

   $ 513,521         8.75   $ 177,802         3.00     N/A         N/A   

BancFirst

     481,594         8.22     177,207         3.00   $ 295,346         5.00

As of September 30, 2013, BancFirst was considered to be “well capitalized” and there are no conditions or events since the most recent notification of BancFirst’s capital category that management believes would materially change its category under capital requirements existing as of the report date. To be well capitalized under Federal bank regulatory agency definitions, a depository institution must have a Tier 1 Ratio of at least 6%, a combined Tier 1 and Tier 2 Ratio of at least 10%, and a Leverage Ratio of at least 5%. The Company’s trust preferred securities have continued to be included in Tier 1 capital as the Company’s total assets do not exceed $10 billion.

Basel III Capital Rules

In July 2013, the three Federal bank regulatory agencies jointly published interim final rules (the “Basel III Capital Rules”) establishing a new comprehensive capital framework for U.S. banking organizations. The rules implement the Basel Committee’s December 2010 framework known as “Basel III” for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. These Rules substantially revise the risk-based capital requirements applicable to bank holding companies and depository institutions, compared to the current U.S. risk-based capital rules. The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. These Rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing risk-weighting approach with a more risk-sensitive approach. The Basel III Capital Rules also implement the requirements of Section 939A of the Dodd-Frank Act to remove references to credit ratings from the federal banking agencies’ rules. The Basel III Capital Rules are effective for the Company and BancFirst on January 1, 2015 (subject to a 4-year phase-in period).

 

17


The Basel III Capital Rules, among other things, (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consist of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital, and (iv) expand the scope of the deductions/adjustments as compared to existing regulations.

Under the Basel III Capital Rules, the initial minimum capital ratios as of January 1, 2015 will be as follows:

4.5% CET1 to risk-weighted assets.

6.0% Tier 1 capital to risk-weighted assets.

8.0% Total capital to risk-weighted assets.

4.0% Minimum leverage ratio

Implementation of the deductions and other adjustments to CET1 will begin on January 1, 2015 and will be phased-in over a 4-year period (beginning at 40% on January 1, 2015 and an additional 20% per year thereafter). Under the new rule, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. The implementation of the capital conservation buffer will begin on January 1, 2016 at the 0.625% level and be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019).

Management believes that, as of September 30, 2013, the Company and BancFirst would meet all capital adequacy requirements under the Basel III Capital Rules on a fully phased-in basis as if such requirements were currently in effect.

 

18


(8) NET INCOME PER COMMON SHARE

Basic and diluted net income per common share are calculated as follows:

 

     Income
(Numerator)
     Shares
(Denominator)
     Per Share
Amount
 
     (Dollars in thousands, except per share data)  

Three Months Ended September 30, 2013

        

Basic

        

Income available to common stockholders

   $ 14,491         15,287,535       $ 0.94   
        

 

 

 

Effect of stock options

     —           307,346      
  

 

 

    

 

 

    

Diluted

        

Income available to common stockholders plus assumed exercises of stock options

   $ 14,491         15,594,881       $ 0.93   
  

 

 

    

 

 

    

 

 

 

Three Months Ended September 30, 2012

        

Basic

        

Income available to common stockholders

   $ 13,860         15,174,755       $ 0.91   
        

 

 

 

Effect of stock options

     —           272,639      
  

 

 

    

 

 

    

Diluted

        

Income available to common stockholders plus assumed exercises of stock options

   $ 13,860         15,447,394       $ 0.90   
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2013

        

Basic

        

Income available to common stockholders

   $ 40,456         15,252,967       $ 2.65   
        

 

 

 

Effect of stock options

     —           263,387      
  

 

 

    

 

 

    

Diluted

        

Income available to common stockholders plus assumed exercises of stock options

   $ 40,456         15,516,354       $ 2.61   
  

 

 

    

 

 

    

 

 

 

Nine Months Ended September 30, 2012

        

Basic

        

Income available to common stockholders

   $ 39,594         15,155,035       $ 2.61   
        

 

 

 

Effect of stock options

     —           276,063      
  

 

 

    

 

 

    

Diluted

        

Income available to common stockholders plus assumed exercises of stock options

   $ 39,594         15,431,098       $ 2.57   
  

 

 

    

 

 

    

 

 

 

The following table shows the number and average exercise price of options that were excluded from the computation of diluted net income per common share for each period because the options’ exercise prices were greater than the average market price of the common shares:

 

     Shares      Average
Exercise Price
 

Three Months Ended September 30, 2013

     3,804       $ 50.74   

Three Months Ended September 30, 2012

     479,000         39.21   

Nine Months Ended September 30, 2013

     330,165         40.09   

Nine Months Ended September 30, 2012

     597,200         38.66   

 

(9) FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date.

FASB ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

 

•    Level 1   Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

19


•    Level 2   Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument.
•    Level 3   Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category includes certain impaired loans, foreclosed assets, other real estate, goodwill and other intangible assets.

Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

A description of the valuation methodologies and key inputs used to measure financial assets and financial liabilities at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to the following categories of the Company’s financial assets and financial liabilities.

Securities Available for Sale

Securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other securities available for sale including U.S. Federal agencies, mortgage backed securities, and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Company also invests in equity securities classified as available for sale for which observable information is not readily available. These securities are reported at fair value utilizing Level 3 inputs. For these securities, management determines the fair value based on the income approach or information provided by outside consultants or lead investors.

The Company reviews the prices for Level 1 and Level 2 securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities that are esoteric or that have complicated structures. The Company’s entire portfolio consists of traditional investments including U.S. Treasury obligations, Federal agency mortgage pass-through securities, general obligation municipal bonds and a small amount of municipal revenue bonds. Pricing for such instruments is fairly generic and is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters adjusted for the specific issue. From time to time, the Company will validate, on a sample basis, prices supplied by the independent pricing service by comparison to prices obtained from third party sources.

Derivatives

Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer and market quotations to value its oil and gas swaps and options. The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation models.

Loans Held For Sale

The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank, allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are valued using Level 2 inputs. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis.

Mortgage Servicing Intangibles

The Company acquired Mortgage Servicing Intangibles with the acquisition of 1st Bank Oklahoma on July 12, 2011. Mortgage Servicing Intangibles are amortized based on current prepayment assumptions and are adjusted to fair value quarterly, if impaired. Fair value is estimated based on the present value of future cash flows over

 

20


several interest rate scenarios, which are then discounted at risk-adjusted rates. The Company considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. When available, fair value estimates and assumptions are compared to observable market data and the recent market activity and actual portfolio experience.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2013 and 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 

     Level 1
Inputs
     Level 2
Inputs
     Level 3
Inputs
     Total Fair
Value
 
     (Dollars in thousands)  

September 30, 2013

           

Securities available for sale:

           

U.S. Treasury

   $ —         $ —         $ —         $ —     

U.S. Federal agencies

     —           340,904         20,000         360,904   

Mortgage-backed securities

     —           14,455         19,501         33,956   

States and political subdivisions

     —           53,386         —           53,386   

Other securities

     —           3,421         10,760         14,181   

Derivative assets

     —           3,049         —           3,049   

Derivative liabilities

     —           1,886         —           1,886   

Loans held for sale

     —           4,934         —           4,934   

Mortgage servicing intangibles

     —           —           595         595   

September 30, 2012

           

Securities available for sale:

           

U.S. Treasury

   $ —         $ —         $ —         $ —     

U.S. Federal agencies

     —           413,131         20,000         433,131   

Mortgage-backed securities

     —           22,390         —           22,390   

States and political subdivisions

     —           57,829         —           57,829   

Other securities

     —           —           10,356         10,356   

Derivative assets

     —           4,175         —           4,175   

Derivative liabilities

     —           1,868         —           1,868   

Loans held for sale

     —           13,384         —           13,384   

Mortgage servicing intangibles

     —           —           844         844   

The changes in Level 3 assets measured at estimated fair value on a recurring basis during the nine months ended September 30, 2013 and 2012 were as follows:

 

     Nine Months Ended  
     September 30,  
     2013     2012  
     (Dollars in thousands)  

Balance at the beginning of the year

   $ 30,779      $ 33,225   

Purchases, issuances and settlements

     20,600        1,897   

Sales

     (251     (5,563

Gains included in earnings

     182        4,424   

Total unrealized losses

     (454     (2,783
  

 

 

   

 

 

 

Balance at the end of the period

   $ 50,856      $ 31,200   
  

 

 

   

 

 

 

The Company’s policy is to recognize transfers in and transfers out of Levels 1, 2 and 3 as of the end of the reporting period. During the nine months ended September 30, 2013 and 2012, the Company did not transfer any securities between levels in the fair value hierarchy.

 

21


Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities are reported at fair value utilizing Level 3 inputs.

Impaired loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. In no case does the fair value of an impaired loan exceed the fair value of the underlying collateral. The impaired loans are adjusted to fair value through a specific allocation of the allowance for loan losses.

Foreclosed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible loan losses based upon the fair value of the foreclosed asset.

Other real estate owned is revalued at fair value subsequent to initial recognition, with any losses recognized in net expense from other real estate owned.

The following table summarizes assets measured at fair value on a nonrecurring basis and the related gains or losses recognized during the period:

 

     Level 1      Level 2      Level 3      Total
Fair
Value
     Gains
(Losses)
 
     (Dollars in thousands)  

Nine Months Ended September 30, 2013

              

Impaired loans (less specific allowance)

     —           —         $ 36,286       $ 36,286       $ —     

Foreclosed assets

     —           —           307         307         (9

Other real estate owned

     —           —           8,121         8,121         (754

Nine Months Ended September 30, 2012

              

Impaired loans (less specific allowance)

     —           —         $ 43,206       $ 43,206       $ —     

Foreclosed assets

     —           —           237         237         (84

Other real estate owned

     —           —           9,559         9,559         (1,226

Estimated Fair Value of Financial Instruments

The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instruments that are not recorded at fair value. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity. The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents Include: Cash and Due from Banks, Federal Funds Sold and Interest-Bearing Deposits

The carrying amount of these short-term instruments is a reasonable estimate of fair value.

Securities Held for Investment

For securities held for investment, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities making adjustments for credit or liquidity if applicable.

Loans

For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair values of other types of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

 

22


Deposits

The fair values of transaction and savings accounts are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using the rates currently offered for deposits of similar remaining maturities.

Short-term Borrowings

The amounts payable on these short-term instruments are reasonable estimates of fair value.

Long-term Borrowings

The fair values of fixed-rate long-term borrowings are estimated using the rates that would be charged for borrowings of similar remaining maturities.

Junior Subordinated Debentures

The fair values of junior subordinated debentures are estimated using the rates that would be charged for junior subordinated debentures of similar remaining maturities.

Loan Commitments and Letters of Credit

The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair values of letters of credit are based on fees currently charged for similar agreements.

The estimated fair values of the Company’s financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value, are as follows:

 

     September 30,  
     2013      2012  
     Carrying
Amount
     Fair Value      Carrying
Amount
     Fair Value  
     (Dollars in thousands)  

FINANCIAL ASSETS

           

Level 2 inputs:

           

Cash and cash equivalents

   $ 1,826,936       $ 1,826,936       $ 1,912,614       $ 1,912,614   

Securities held for investment

     12,213         12,328         16,769         17,080   

Level 3 inputs:

           

Loans, net

     3,320,079         3,346,578         3,078,838         3,143,799   

FINANCIAL LIABILITIES

           

Level 2 inputs:

           

Deposits

     5,309,464         5,338,655         5,253,505         5,275,969   

Short-term borrowings

     5,074         5,074         5,665         5,665   

Long-term borrowings

     8,938         8,889         11,255         11,333   

Junior subordinated debentures

     26,804         28,927         26,804         28,777   

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

           

Loan commitments

        1,378            1,300   

Letters of credit

        468            458   

Non-financial Assets and Non-financial Liabilities Measured at Fair Value

The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis include intangible assets (excluding mortgage service rights which are valued quarterly) and other non-financial long-lived assets measured at fair value and adjusted for impairment. These items are evaluated at least annually for impairment. The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were not considered to be significant to the Company at September 30, 2013 or 2012.

 

23


(10) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, the Company simultaneously enters into an offsetting contract with a counterparty to mitigate the exposure to fluctuations in oil and gas prices. These derivatives are not designated as hedged instruments and are recorded on the Company’s consolidated balance sheet at fair value.

The Company utilizes dealer quotations and observable market data inputs to substantiate internal valuation models. The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table:

 

     September 30, 2013  

Oil and Natural Gas Swaps and Options

   Notional Units    Notional
Amount
    Estimated
Fair Value
 
     (Notional amounts and dollars in thousands)  

Oil

       

Derivative assets

   Barrels      335      $ 1,665   

Derivative liabilities

   Barrels      (335     (1,178

Natural Gas

       

Derivative assets

   MMBTUs      2,962        1,384   

Derivative liabilities

   MMBTUs      (2,962     (708

Total Fair Value

   Included in     

Derivative assets

   Other assets        3,049   

Derivative liabilities

   Other liabilities        (1,886

The following table is a summary of the Company’s recognized income related to the activity, which was included in other noninterest income:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  
     (Dollars in thousands)  

Derivative income

   $ 71       $ 205       $ 309       $ 555   

The Company’s credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by market price movements.

Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor’s) and monitoring market information.

The following table is a summary of the Company’s net credit exposure relating to oil and gas swaps and options with bank counterparties:

 

     September 30, 2013  
     (Dollars in thousands)  

Credit exposure

   $ (149

Balance Sheet Offsetting

Derivatives may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company’s derivative transactions with upstream financial institution counterparties and bank customers are generally executed under International Swaps and Derivative Association (“ISDA”) master

 

24


agreements which include “right of set-off” provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset such financial instruments for financial reporting purposes.

 

(11) 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 are 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, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. 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:

 

     Metropolitan
Banks
     Community
Banks
     Other
Financial
Services
     Executive,
Operations
& Support
    Eliminations     Consolidated  
     (Dollars in thousands)  

Three Months Ended:

               

September 30, 2013

               

Net interest income (expense)

   $ 14,043       $ 25,613       $ 1,491       $ (435   $ —        $ 40,712   

Noninterest income

     3,213         12,750         6,864         15,651        (14,826     23,652   

Income before taxes

     9,173         15,229         2,619         8,688        (14,654     21,055   

September 30, 2012

               

Net interest income (expense)

   $ 13,267       $ 26,302       $ 1,777       $ (514   $ —        $ 40,832   

Noninterest income

     2,840         11,153         7,404         14,881        (14,162     22,116   

Income before taxes

     8,302         15,234         3,266         7,463        (14,015     20,250   

Nine Months Ended:

               

September 30, 2013

               

Net interest income (expense)

   $ 41,997       $ 76,181       $ 4,786       $ (1,366   $ —        $ 121,598   

Noninterest income

     9,519         36,141         19,839         44,192        (41,771     67,920   

Income before taxes

     26,218         43,818         8,014         24,425        (41,481     60,994   

September 30, 2012

               

Net interest income (expense)

   $ 39,784       $ 79,317       $ 5,211       $ (1,794   $ —        $ 122,518   

Noninterest income

     8,193         32,009         23,482         43,507        (41,274     65,917   

Income before taxes

     24,954         45,433         11,664         19,682        (41,017     60,716   

Total Assets:

               

September 30, 2013

   $ 2,031,194       $ 3,723,491       $ 120,476       $ 647,336      $ (595,767   $ 5,926,730   

December 31, 2012

     1,996,539         3,801,653         186,473         602,342        (564,757     6,022,250   

September 30, 2012

     1,892,444         3,745,727         126,704         636,853        (564,977     5,836,751   

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. Capital expenditures are generally charged to the business unit using the asset.

 

25


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s consolidated financial position and results of operations. This discussion and analysis should be read in conjunction with the Company’s December 31, 2012 consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and the Company’s consolidated financial statements and the related Notes included in Item 1.

FORWARD LOOKING STATEMENTS

The Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management’s current expectations or forecasts of future events. 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.

SUMMARY

BancFirst Corporation reported net income of $14.5 million, or $0.93 diluted earnings per common share, for the third quarter of 2013, compared to net income of $13.9 million, or $0.90 diluted earnings per common share for the third quarter of 2012. Net income for the first nine months of 2013 was $40.5 million or $2.61 diluted earnings per common share, compared to $39.6 million, or $2.57 diluted earnings per common share for the nine months ended September 30, 2012.

The Company’s net interest income for the third quarter of 2013 was $40.7 million compared to $40.8 million for the third quarter of 2012. The net interest margin for the quarter was 3.01% compared to 3.06% a year ago as interest rates have remained at historically low levels. The Company’s provision for loan loss for the third quarter of 2013 was virtually zero, primarily due to reductions in adversely graded loans. Net charge-offs for the quarter were $111,000, compared to $411,000 for the same period a year ago. Noninterest income for the quarter totaled $23.7 million compared to $22.1 million for the third quarter of 2012. Noninterest expense was $43.3 million compared to $42.5 million a year ago.

At September 30, 2013, the Company’s total assets were $5.9 billion, compared to $6.0 billion at December 31, 2012. Loans totaled $3.4 billion, up $116.5 million over December 31, 2012. Deposits totaled $5.3 billion, down $131.4 million due to a temporary influx of deposits at year end 2012 and efforts by the Company to move certain commercial deposits into sweep accounts. The Company’s total stockholders’ equity was $546.0 million, an increase of $26.4 million or 5.1% over December 31, 2012.

Asset quality remained strong and was little changed from the previous quarters. Nonperforming and restructured assets edged down to 0.72% of total assets compared to 0.81% at December 31, 2012. The allowance to total loans was 1.16% compared to 1.19% at year end 2012.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

SEGMENT INFORMATION

See Note (11) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.

 

26


RESULTS OF OPERATIONS

Selected income statement data and other selected data for the comparable periods were as follows:

BANCFIRST CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Unaudited)

(Dollars in thousands, except per share data)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2013     2012     2013     2012  

Income Statement Data

        

Net interest income

   $ 40,712      $ 40,832      $ 121,598      $ 122,518   

Provision for loan losses

     (12     233        804        654   

Securities transactions

     90        385        341        4,643   

Total noninterest income

     23,652        22,116        67,920        65,917   

Salaries and employee benefits

     26,094        24,641        76,388        74,271   

Total noninterest expense

     43,321        42,465        127,720        127,065   

Net income

     14,491        13,860        40,456        39,594   

Per Common Share Data

        

Net income – basic

   $ 0.94      $ 0.91      $ 2.65      $ 2.61   

Net income – diluted

     0.93        0.90        2.61        2.57   

Cash dividends

     0.31        0.29        0.89        0.83   

Performance Data

        

Return on average assets

     0.99     0.96     0.94     0.93

Return on average stockholders’ equity

     10.62        10.86        10.14        10.59   

Cash dividend payout ratio

     33.05        31.87        33.56        31.80   

Net interest spread

     2.85        2.87        2.90        2.94   

Net interest margin

     3.01        3.06        3.06        3.13   

Efficiency ratio

     67.31        67.46        67.39        67.43   

Net charge-offs to average loans

     0.00        0.01        0.02        0.04   

Net Interest Income

For the three months ended September 30, 2013, net interest income, which is the Company’s principal source of operating revenue, was $40.7 million compared to $40.8 million for the three months ended September 30, 2012. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The Company’s net interest margin decreased slightly for the third quarter of 2013 compared to the third quarter of 2012, due to continued low interest rates and the maturity or pay down of higher-yielding earning assets. If interest rates and/or loan volume do not increase, management expects continued compression of its net interest margin for the remainder of 2013 as higher yielding loans and securities mature and are replaced at current market rates.

Net interest income for the nine months ended September 30, 2013 was $121.6 million compared to $122.5 million for the nine months ended September 30, 2012. The net interest margin for the year-to-date decreased compared to the same period of the previous year, due to continued low interest rates and the maturity or pay down of higher-yielding earning assets.

Provision for Loan Losses

The Company’s provision for loan loss for the third quarter of 2013 was virtually zero, primarily due to reductions in adversely graded loans. Management believes the allowance for loan losses is appropriate based upon management’s best estimate of probable losses that have been incurred within the existing loan portfolio. Should any

 

27


of the factors considered by management in evaluating the appropriate level of the allowance for loan losses change, the Company’s estimate of probable loan losses could also change, which could affect the amount of future provisions for loan losses. Net loan charge-offs were $111,000 for the third quarter of 2013, compared to $411,000 for the third quarter of 2012. The rate of net charge-offs to average total loans is presented in the preceding table.

For the nine months ended September 30, 2013, the Company’s provision for loan losses was $804,000 compared to $654,000 for the same period of 2012. Net loan charge-offs were $670,000 compared to $1.1 million for the same period of the prior year.

Noninterest Income

Noninterest income totaled $23.7 million for the third quarter of 2013 compared to $22.1 million for the third quarter of 2012. Service charges on deposits have increased due to an increase in deposit accounts and a higher volume of customer overdrafts.

Noninterest income for the nine months ended September 30, 2013 totaled $67.9 million compared to $65.9 million for the nine months ended September 30, 2012. The increase year over year was due to increases in service charges on deposits, trust revenue and insurance commissions, partially offset by a $4.5 million pretax securities gain from the sale of an investment by Council Oak Investment Corporation in the first quarter of 2012.

The Company had fees from debit card usage totaling $13.2 million and $12.3 million during the nine months ended September 30, 2013 and 2012, respectively. The Dodd-Frank Act has given the Federal Reserve the authority to establish rules regarding debit card interchange fees charged for electronic debit transactions by payment card issuers. Because of the uncertainty as to any future rulemaking by the Federal Reserve and the inability to forecast competitive responses, the Company cannot provide any assurance as to the ultimate impact of the Dodd-Frank Act on the amount of fees from debit card usage reported in future periods.

Noninterest Expense

For the third quarter of 2013, noninterest expense totaled $43.3 million compared to $42.5 million for the third quarter of 2012.

For the nine months ended September 30, 2013, noninterest expense totaled $127.7 million compared to $127.1 million for the nine months ended September 30, 2012. Noninterest expense increased partly due to an increase in salaries and employee benefits. Also, noninterest expense in 2012 included $1.6 million in merger related costs and approximately $500,000 of expenses related to the sale of an investment by the Company’s Small Business Investment Corporation, Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst. Additionally, the net expense from other real estate owned for the first nine months of 2012 was approximately $499,000 higher than for the first nine months of 2013.

Income Taxes

The Company’s effective tax rate on income before taxes was 31.2% for the third quarter of 2013, compared to 31.6% for the third quarter of 2012.

The Company’s effective tax rate on income before taxes was 33.7% for the first nine months of 2013, compared to 34.8% for the first nine months of 2012. Additional tax credits have reduced the Company’s effective tax rate in 2013.

 

28


FINANCIAL POSITION

BANCFIRST CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in thousands, except per share data)

 

     September 30,     December 31,     September 30,  
     2013     2012     2012  
     (unaudited)           (unaudited)  

Balance Sheet Data

      

Total assets

   $ 5,926,730      $ 6,022,250      $ 5,836,751   

Total loans

     3,358,938        3,242,427        3,116,096   

Allowance for loan losses

     38,859        38,725        37,258   

Securities

     474,640        562,542        540,475   

Deposits

     5,309,464        5,440,830        5,253,505   

Stockholders’ equity

     545,973        519,567        510,387   

Book value per share

     35.69        34.09        33.58   

Tangible book value per share

     32.08        30.37        29.82   

Average loans to deposits (year-to-date)

     63.13     60.27     60.11

Average earning assets to total assets (year-to-date)

     92.65        92.73        92.66   

Average stockholders’ equity to average assets (year-to-date)

     9.24        8.79        8.78   

Asset Quality Ratios

      

Nonperforming and restructured loans to total loans

     1.02     1.20     1.30

Nonperforming and restructured assets to total assets

     0.72        0.81        0.86   

Allowance for loan losses to total loans

     1.16        1.19        1.20   

Allowance for loan losses to nonperforming and restructured loans

     113.00        99.42        91.73   

Cash, Federal Funds Sold and Interest-Bearing Deposits with Banks

The aggregate of cash and due from banks, interest-bearing deposits with banks, and Federal funds sold as of September 30, 2013 decreased $118.9 million from December 31, 2012 and $85.7 million from September 30, 2012. The higher level at year-end 2012 was due primarily to funds provided by the temporary influx of deposits at year-end 2012 and efforts by the Company to move certain commercial deposits into sweep accounts. Federal funds sold consist of overnight investments of excess funds with other financial institutions. Due to the Federal Reserve Bank’s intervention into the funds market that has resulted in near zero overnight Federal funds rates, the Company has continued to maintain the majority of its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period which continues to be 0.25%.

Securities

At September 30, 2013, total securities decreased $87.9 million compared to December 31, 2012 and decreased $65.8 million compared to September 30, 2012. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized gain on securities available for sale, before taxes, was $6.0 million at September 30, 2013, compared to an unrealized gain of $9.7 million at December 31, 2012, and an unrealized gain of $10.3 million at September 30, 2012. These unrealized gains are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of $3.9 million, $6.3 million and $6.7 million respectively.

Loans (Including Acquired Loans)

At September 30, 2013, total loans were up $116.5 million from December 31, 2012 and up $242.8 million from September 30, 2012, due to internal growth.

Allowance for Loan Losses/Fair Value Adjustments on Acquired Loans

At September 30, 2013, the allowance for loan losses represented 1.16% of total loans, compared to 1.19% at December 31, 2012, and 1.20% at September 30, 2012.

The fair value adjustment on acquired loans consists of an interest rate component to adjust the effective rates on the loans to market rates and a credit component to adjust for estimated credit exposures in the acquired loans. The credit component of the adjustment was $2.3 million at September 30, 2013, $2.8 million at December 31, 2012, and $3.1 million at September 30, 2012 while the acquired loans outstanding were $72.9 million, $108.5 million and $136.6 million, respectively. The decrease from the third quarter of 2012 was due to improved credit quality of the loans, loan payoffs and the early settlement of the loan escrow agreement related to one of the bank acquisitions.

 

29


Nonperforming and Restructured Assets

Nonperforming and restructured assets totaled $42.8 million at September 30, 2013, compared to $48.5 million at December 31, 2012 and $50.4 million at September 30, 2012. The Company’s level of nonperforming and restructured assets has continued to be relatively low.

Nonaccrual loans totaled $15.1 million at September 30, 2013, compared to $20.5 million at the end of 2012. Nonaccrual loans decreased $5.1 million due primarily to the resolution of several loans. The Company’s nonaccrual loans are primarily commercial and real estate loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of interest or principal or both is in serious doubt. Interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is reasonably expected. Otherwise, interest income is not recognized until the principal balance is fully collected. Total interest income, which was not accrued on nonaccrual loans outstanding, was approximately $1.3 million for the nine months ended September 30, 2013 and $1.0 million for the nine months ended September 30, 2012. Only a small amount of this interest is expected to be ultimately collected.

Other real estate owned and repossessed assets totaled $8.4 million at September 30, 2013, compared to $9.6 million at December 31, 2012 and $9.8 million at September 30, 2012.

Potential problem loans are performing loans to borrowers with a weakened financial condition, or which are experiencing unfavorable trends in their financial condition, which causes management to have concerns as to the ability of such borrowers to comply with the existing repayment terms. The Company had approximately $5.1 million of these loans at September 30, 2013 compared to $5.3 million at December 31, 2012 and $5.2 million at September 30, 2012. Potential problem loans are not included in nonperforming and restructured loans. In general, these loans are adequately collateralized and have no specific identifiable probable loss. Loans which are considered to have identifiable probable loss potential are placed on nonaccrual status, are allocated a specific allowance for loss or are directly charged-down, and are reported as nonperforming.

Liquidity and Funding

Deposits

At September 30, 2013, total deposits decreased $131.4 million compared to December 31, 2012 and increased $56.0 million compared to September 30, 2012. The decrease from December 2012 was due to a temporary influx of deposits at year end 2012 and efforts by the Company to move certain commercial deposits into sweep accounts. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits were 93.3% at September 30, 2013, compared to 92.8% at December 31, 2012 and 92.6% at September 30, 2012. Noninterest-bearing deposits to total deposits were 38.1% at September 30, 2013, compared to 37.1% at December 31, 2012 and 36.7% at September 30, 2012.

Short-Term Borrowings

Short-term borrowings, consisting primarily of Federal funds purchased and repurchase agreements are another source of funds for the Company. The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained. Short-term borrowings were $5.1 million at September 30, 2013, compared to $4.6 million from December 31, 2012 and $5.7 million at September 30, 2012.

Long-Term Borrowings

The Company has a line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas to use for liquidity or to match-fund certain long-term fixed rate loans. The Company’s assets, including residential first mortgages of $554.7 million, are pledged as collateral for the borrowings under the line of credit. As of September 30, 2013 the Company had approximately $8.9 million in advances outstanding, compared to $9.2 million at December 31, 2012 and $11.3 million at September 30, 2012. The advances mature at varying dates through 2014.

There have not been any other material changes from the liquidity and funding discussion included in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

30


Capital Resources

Stockholders’ equity totaled $546.0 million at September 30, 2013, compared to $519.6 million at December 31, 2012 and $510.4 million at September 30, 2012. In addition to net income of $40.5 million, other changes in stockholders’ equity during the nine months ended September 30, 2013 included $3.6 million related to stock option exercises and $1.1 million related to stock-based compensation, that were partially offset by $13.6 million in dividends, $2.7 million of common stock acquired and canceled, and a $2.4 million decrease in other comprehensive income. The Company’s leverage ratio and total risk-based capital ratio were 8.75% and 14.72%, respectively, at September 30, 2013, well in excess of the regulatory minimums.

See Note (7) of the Notes to the Consolidated Financial Statements for a discussion of capital ratio requirements.

CONTRACTUAL OBLIGATIONS

There have not been any material changes in the resources required for scheduled repayments of contractual obligations from the table of Contractual Cash Obligations included in Management’s Discussion and Analysis, which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

31


BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)

 

     Three Months Ended September 30,  
     2013     2012  
           Interest      Average           Interest      Average  
     Average     Income/      Yield/     Average     Income/      Yield/  
     Balance     Expense      Rate     Balance     Expense      Rate  

ASSETS

              

Earning assets:

              

Loans (1)

   $ 3,297,360      $ 41,766         5.03   $ 3,093,928      $ 42,112         5.40

Securities – taxable

     453,614        1,097         0.96        516,187        1,681         1.29   

Securities – tax exempt

     40,549        438         4.28        47,649        563         4.69   

Interest-bearing deposits w/ banks & FFS

     1,601,947        1,031         0.26        1,667,921        1,071         0.25   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total earning assets

     5,393,470        44,332         3.26        5,325,685        45,427         3.38   
  

 

 

   

 

 

      

 

 

   

 

 

    

Nonearning assets:

              

Cash and due from banks

     173,030             141,353        

Interest receivable and other assets

     302,772             306,079        

Allowance for loan losses

     (39,284          (37,533     
  

 

 

        

 

 

      

Total nonearning assets

     436,518             409,899        
  

 

 

        

 

 

      

Total assets

   $ 5,829,988           $ 5,735,584        
  

 

 

        

 

 

      

LIABILITIES AND STOCKHOLDERS EQUITY

              

Interest-bearing liabilities:

              

Transaction deposits

   $ 629,765      $ 155         0.10   $ 693,616      $ 224         0.13

Savings deposits

     1,838,186        1,051         0.23        1,783,662        1,412         0.31   

Time deposits

     790,106        1,643         0.82        854,967        2,093         0.97   

Short-term borrowings

     4,921        1         0.05        6,521        7         0.43   

Long-term borrowings

     9,584        52         2.16        11,282        84         2.95   

Junior subordinated debentures

     26,804        492         7.29        26,804        492         7.28   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-bearing liabilities

     3,299,366        3,394         0.41        3,376,852        4,312         0.51   
  

 

 

   

 

 

      

 

 

   

 

 

    

Interest-free funds:

              

Noninterest-bearing deposits

     1,965,052             1,825,053        

Interest payable and other liabilities

     24,107             27,404        

Stockholders’ equity

     541,463             506,275        
  

 

 

        

 

 

      

Total interest free funds

     2,530,622             2,358,732        
  

 

 

        

 

 

      

Total liabilities and stockholders’ equity

   $ 5,829,988           $ 5,735,584        
  

 

 

        

 

 

      

Net interest income

     $ 40,938           $ 41,115      
    

 

 

        

 

 

    

Net interest spread

          2.85          2.87
       

 

 

        

 

 

 

Effect of interest free funds

          0.16          0.19
       

 

 

        

 

 

 

Net interest margin

          3.01          3.06
       

 

 

        

 

 

 

 

(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

 

32


BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)

 

     Nine Months Ended September 30,  
     2013     2012  
           Interest      Average           Interest      Average  
     Average     Income/      Yield/     Average     Income/      Yield/  
     Balance     Expense      Rate     Balance     Expense      Rate  

ASSETS

              

Earning assets:

              

Loans (1)

   $ 3,251,226      $ 124,589         5.12   $ 3,064,584      $ 126,126         5.48

Securities – taxable

     497,410        3,745         1.01        523,953        6,174         1.57   

Securities – tax exempt

     42,769        1,452         4.54        50,874        1,847         4.84   

Interest-bearing deposits w/ banks & FFS

     1,560,303        2,980         0.26        1,620,688        3,105         0.26   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total earning assets

     5,351,708        132,766         3.32        5,260,099        137,252         3.48   
  

 

 

   

 

 

      

 

 

   

 

 

    

Nonearning assets:

              

Cash and due from banks

     156,353             144,471        

Interest receivable and other assets

     307,092             309,874        

Allowance for loan losses

     (38,904          (37,610     
  

 

 

        

 

 

      

Total nonearning assets

     424,541             416,735        
  

 

 

        

 

 

      

Total assets

   $ 5,776,249           $ 5,676,834        
  

 

 

        

 

 

      

LIABILITIES AND STOCKHOLDERS EQUITY

              

Interest-bearing liabilities:

              

Transaction deposits

   $ 654,217      $ 486         0.10   $ 718,997      $ 758         0.14

Savings deposits

     1,803,802        3,143         0.23        1,737,242        4,356         0.33   

Time deposits

     806,530        5,149         0.85        871,749        6,747         1.03   

Short-term borrowings

     4,554        4         0.13        7,255        23         0.42   

Long-term borrowings

     9,707        176         2.42        12,832        280         2.91   

Junior subordinated debentures

     26,804        1,474         7.35        32,504        1,643         6.73   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-bearing liabilities

     3,305,614        10,432         0.42        3,380,579        13,807         0.54   
  

 

 

   

 

 

      

 

 

   

 

 

    

Interest-free funds:

              

Noninterest-bearing deposits

     1,915,265             1,770,283        

Interest payable and other liabilities

     21,884             27,749        

Stockholders’ equity

     533,486             498,223        
  

 

 

        

 

 

      

Total interest free funds

     2,470,635             2,296,255        
  

 

 

        

 

 

      

Total liabilities and stockholders’ equity

   $ 5,776,249           $ 5,676,834        
  

 

 

        

 

 

      

Net interest income

     $ 122,334           $ 123,445      
    

 

 

        

 

 

    

Net interest spread

          2.90          2.94
       

 

 

        

 

 

 

Effect of interest free funds

          0.16          0.19
       

 

 

        

 

 

 

Net interest margin

          3.06          3.13
       

 

 

        

 

 

 

 

(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes in the Registrant’s disclosures regarding market risk since December 31, 2012, the date of its most recent annual report to stockholders.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer, Chief Financial Officer and Disclosure Committee, which includes the Company’s Chief Risk Officer, Chief Asset Quality Officer, Chief Internal Auditor, Senior Financial Officer, Treasurer, Controller, and General Counsel have evaluated, as of the last day of the period covered by this report,

 

33


the Company’s disclosure controls and procedures. Based on their evaluation they concluded that the disclosure controls and procedures of the Company are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms.

No changes were made to the Company’s internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The Company has been named as a defendant in various legal actions arising from the conduct of its normal business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in the opinion of the Company, any such liability will not have a material adverse effect on the consolidated financial statements of the Company.

Item 1A. Risk Factors.

As of September 30, 2013, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended September 30, 2013.

 

Period

   Total Number of
Shares Purchased
    Average Price
Paid Per Share
     Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
     Maximum
Number of Shares
That May Yet Be
Purchased Under
the Plan at the
End of the Period
 

July 1, 2013 to July 31, 2013

     20,600 (1)    $ 50.76         —           194,723   

August 1, 2013 to August 31, 2013

     —          —           —           194,723   

September 1, 2013 to September 30, 2013

     —          —           —           194,723   

 

(1) Represents private transactions with individual shareholders.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

 

34


Item 6. Exhibits.

 

Exhibit
Number

  

Exhibit

    3.1    Second Amended and Restated Certificate of Incorporation of BancFirst Corporation (filed as Exhibit 1 to the Company’s 8-A/A filed July 23, 1998 and incorporated herein by reference).
    3.2    Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of BancFirst Corporation dated June 15, 2004 (filed as Exhibit 3.5 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2004 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 Year Ended December 31, 1992 and incorporated herein by reference).
    3.4    Resolution of the Board of Directors amending Section XXVII of the Company’s By-Laws (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).
    3.5    Amendment to Amended By-Laws, amending Article XVI, Section 1 and Article XVII, Section 1 of the Company’s By-Laws (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 28, 2008 and incorporated herein by reference).
    3.6    Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation of BancFirst Corporation dated May 23, 2013 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated May 29, 2013 and incorporated herein by reference).
    4.1    Instruments defining the rights of securities holders (see Exhibits 3.1, 3.2, 3.3 and 3.4 above).
    4.2    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 4.1 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).
    4.3    Amendment No. 1 to Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent (filed as Exhibit 4.2 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).
    4.4    Form of Amended and Restated Trust Agreement relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).
    4.5    Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (filed as Exhibit D to Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).
    4.6    Form of Indenture relating to the 7.20% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust II (filed as Exhibit 4.1 on Form S-3 to the Company’s registration statement, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).
    4.7    Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (filed as Exhibit 4.2 on Form S-3 to the Company’s registration statement, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).
    4.8    Form of Guarantee of BancFirst Corporation relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.7 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).
    4.9    Form of Indenture relating to the Union National Bancshares, Inc. (BancFirst Corp. as successor) Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures, Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture, and Form of Certificate to Trustee (filed as Exhibit 4.9 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2010 and incorporated herein by reference).
    4.10    Form of Indenture relating to the FBC Financial Corporation (BancFirst Corp. as successor) Floating Rate Junior Subordinated Deferrable Interest Debentures, Form of Floating Rate Junior Subordinated Deferrable Interest Debenture, and Form of Certificate to Trustee (filed as Exhibit 4.10 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2011 and incorporated herein by reference).

 

35


Exhibit
Number

  

Exhibit

  10.1    BancFirst Corporation Employee Stock Ownership and Trust Agreement adopted December 21, 2006 effective January 1, 2007 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended March 31, 2008 and incorporated herein by reference).
  10.2    Second Amended and Restated BancFirst Corporation Non-Employee Directors’ Stock Option Plan (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).
  10.3    Third Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).
  10.4    Amended and Restated BancFirst Corporation Thrift Plan adopted March 25, 2010 effective January 1, 2010 (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).
  10.5    Amendment (Code Section 415 Compliance) to the BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted July 23, 2009. (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).
  10.6    Amendment (Pension Protection Act, Heart Act and the Worker, Retiree, and Employer Recovery Act) to the BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted December 17, 2009 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).
  10.7    Amendment to the Amended and Restated BancFirst Corporation Thrift Plan adopted December 16, 2010 effective January 1, 2011 (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2010 and incorporated herein by reference).
  10.8    Amendment to the Amended and Restated BancFirst Corporation Thrift Plan adopted October 27, 2011 effective October 1, 2011 (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2011 and incorporated herein by reference).
  10.9    Amendment to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan adopted October 27, 2011 effective October 1, 2011 (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2011 and incorporated herein by reference).
  10.10    Eleventh Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2013 and incorporated herein by reference).
  31.1*    Chief Executive Officer’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).
  31.2*    Chief Financial Officer’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).
  32.1*    CEO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  32.2*    CFO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*    XBRL Instance Document
101.SCH*    XBRL Taxonomy Extension Schema
101.CAL*    XBRL Taxonomy Extension Calculation Linkbase
101.DEF*    XBRL Taxonomy Extension Definition Linkbase
101.LAB*    XBRL Taxonomy Extension Label Linkbase
101.PRE*    XBRL Taxonomy Extension Presentation Linkbase

 

* Filed herewith.

 

36


SIGNATURES

Pursuant to the requirements of the Securities 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 12, 2013      

/s/ David E. Rainbolt

      David E. Rainbolt
      President
      Chief Executive Officer
      (Principal Executive Officer)
Date: November 12, 2013      

/s/ Randy Foraker

      Randy Foraker
      Executive Vice President
      Interim Chief Financial Officer
      and Chief Risk Officer
      (Principal Financial and Accounting Officer)

 

37