UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-14384
BancFirst Corporation
(Exact name of registrant as specified in charter)
Oklahoma
73-1221379
(State or other Jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
101 N. Broadway, Oklahoma City, Oklahoma
73102-8405
(Address of principal executive offices)
(Zip Code)
(405) 270-1086
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
o (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 o No x
As of July 31, 2015 there were 15,580,827 shares of the registrant’s Common Stock outstanding.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
June 30,
December 31,
2015
2014
(unaudited)
(see Note 1)
ASSETS
Cash and due from banks
$
179,190
203,545
Interest-bearing deposits with banks
1,638,038
1,710,350
Securities (fair value: $537,387 and $524,861, respectively)
537,319
524,783
Loans held for sale
13,587
9,433
Loans (net of unearned interest)
3,858,332
3,851,398
Allowance for loan losses
(42,621
)
(40,889
Loans, net of allowance for loan losses
3,815,711
3,810,509
Premises and equipment, net
120,880
121,341
Other real estate owned
7,357
7,859
Intangible assets, net
9,681
10,635
Goodwill
44,594
44,962
Accrued interest receivable and other assets
132,541
131,555
Total assets
6,498,898
6,574,972
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing
2,321,206
2,411,066
Interest-bearing
3,487,015
3,493,638
Total deposits
5,808,221
5,904,704
Short-term borrowings
2,075
3,982
Accrued interest payable and other liabilities
27,554
30,168
Junior subordinated debentures
26,804
Total liabilities
5,864,654
5,965,658
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: 15,562,298 and 15,504,513, respectively
15,562
15,504
Capital surplus
99,202
96,841
Retained earnings
517,028
492,776
Accumulated other comprehensive income, net of income tax of $1,547,
and $2,644, respectively
2,452
4,193
Total stockholders' equity
634,244
609,314
Total liabilities and stockholders' equity
The accompanying Notes are an integral part of these consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
Six Months Ended
INTEREST INCOME
Loans, including fees
46,490
45,855
92,439
88,504
Securities:
Taxable
1,458
1,502
2,857
2,807
Tax-exempt
235
273
481
553
Federal funds sold
1
1,066
1,096
2,128
2,190
Total interest income
49,249
48,726
97,905
94,055
INTEREST EXPENSE
Deposits
2,542
2,733
5,080
5,522
5
7
Long-term borrowings
25
491
492
982
983
Total interest expense
3,034
3,237
6,064
6,537
Net interest income
46,215
45,489
91,841
87,518
Provision for loan losses
1,271
3,129
2,605
4,347
Net interest income after provision for loan losses
44,944
42,360
89,236
83,171
NONINTEREST INCOME
Trust revenue
2,200
2,315
4,542
4,466
Service charges on deposits
14,312
14,360
27,664
27,818
Securities transactions
5,392
85
7,121
535
Income from sales of loans
549
467
989
818
Insurance commissions
3,120
3,262
7,188
7,228
Cash management
1,886
1,703
3,705
3,288
Gain on sale of other assets
41
3
81
8
Other
1,215
1,416
2,721
3,012
Total noninterest income
28,715
23,611
54,011
47,173
NONINTEREST EXPENSE
Salaries and employee benefits
27,886
27,478
55,399
53,416
Occupancy, net
2,700
2,784
5,535
5,573
Depreciation
2,449
2,375
4,913
4,724
Amortization of intangible assets
445
458
889
866
Data processing services
1,179
1,185
2,296
2,355
Net expense from other real estate owned
(184
(406
130
144
Marketing and business promotion
1,401
1,661
3,080
3,377
Deposit insurance
836
873
1,662
1,646
8,717
9,449
16,448
17,592
Total noninterest expense
45,429
45,857
90,352
89,693
Income before taxes
28,230
20,114
52,895
40,651
Income tax expense
(9,677
(5,426
(18,083
(11,306
Net income
18,553
14,688
34,812
29,345
NET INCOME PER COMMON SHARE
Basic
1.19
0.94
2.24
1.90
Diluted
1.17
0.92
2.20
1.86
OTHER COMPREHENSIVE INCOME
Unrealized gains (losses) on securities, net of tax of $261, $(618), $(439) and $(1,021), respectively
(417
980
694
1,045
Reclassification adjustment for gains included in net income, net of tax of $1,302, $14, $1,536 and $34, respectively
(2,063
(22
(2,435
(54
Other comprehensive gain (loss), net of tax of $1,563, $(604), $1,097 and $(987), respectively
(2,480
958
(1,741
991
Comprehensive income
16,073
15,646
33,071
30,336
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
COMMON STOCK
Issued at beginning of period
15,512
15,364
15,334
Shares issued
50
35
58
65
Issued at end of period
15,399
CAPITAL SURPLUS
Balance at beginning of period
97,477
89,951
88,803
Common stock issued
1,080
742
1,316
1,620
Tax effect of stock options
355
325
291
248
Stock-based compensation arrangements
290
429
754
776
Balance at end of period
91,447
RETAINED EARNINGS
503,758
458,857
448,953
Dividends on common stock
(5,283
(4,784
(10,560
(9,537
468,761
ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized gains on securities:
4,932
3,940
3,907
Net change
4,898
Total stockholders’ equity
580,505
4
CONSOLIDATED STATEMENTS OF CASH FLOW
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization
5,802
5,590
Net amortization of securities premiums and discounts
512
Realized securities gains
(7,121
(535
Gain on sales of loans
(989
(818
Cash receipts from the sale of loans originated for sale
84,029
71,074
Cash disbursements for loans originated for sale
(87,635
(73,306
Deferred income tax benefit
(1,464
(2,943
Gain on other assets
(65
Increase in interest receivable
(740
(411
Decrease in interest payable
(14
(316
Amortization of stock-based compensation arrangements
Other, net
343
(1,619
Net cash provided by operating activities
30,762
31,161
INVESTING ACTIVITIES
Net decrease in federal funds sold
4,619
Net cash and due from banks received from acquisitions
174,283
Purchases of available for sale securities
(30,923
(203,890
Proceeds from maturities, calls and paydowns of held for investment securities
670
2,689
Proceeds from maturities, calls and paydowns of available for sale securities
12,979
163,472
Proceeds from sales of available for sale securities
8,576
1,951
Net change in loans
(10,312
(166,388
Purchases of premises, equipment and computer software
(4,797
(5,783
Proceeds from the sale of other assets
3,647
3,322
Net cash used in investing activities
(20,160
(25,725
FINANCING ACTIVITIES
Net change in deposits
(96,483
260
Net (decrease)/increase in short-term borrowings
(1,907
7,727
Paydown of long-term borrowings
(6,938
Issuance of common stock, net
1,665
1,933
Cash dividends paid
(10,544
(9,516
Net cash used in financing activities
(107,269
(6,534
Net decrease in cash, due from banks and interest-bearing deposits
(96,667
(1,098
Cash, due from banks and interest-bearing deposits at the beginning of the period
1,913,895
1,857,535
Cash, due from banks and interest-bearing deposits at the end of the period
1,817,228
1,856,437
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest
6,078
6,853
Cash paid during the period for income taxes
17,230
13,770
Noncash investing and financing activities:
Unpaid common stock dividends declared
5,281
4,765
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United State of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc. and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc. and BancFirst Agency, Inc. All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.
The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
The unaudited interim consolidated financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2014, the date of the most recent annual report.
Reclassifications
Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.
Recent Accounting Pronouncements
In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-02, “Consolidation (Topic 810) – Amendments to the Consolidation Analysis.” ASU 2015-02 implements changes to both the variable interest consolidation model and the voting interest consolidation model. ASU 2015-02 (i) eliminates certain criteria that must be met when determining when fees paid to a decision maker or service provider do not represent a variable interest, (ii) amends the criteria for determining whether a limited partnership is a variable interest entity and (iii) eliminates the presumption that a general partner controls a limited partnership in the voting model. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2015. Adoption of ASU 2015-02 is not expected to have a significant effect on the Company’s financial statements.
In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40).” ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about the Company’s ability to continue as a going concern and related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date the financial statements are issued. The amendments are effective for annual periods, and
6
interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. Adoption of ASU 2014-15 is not expected to have a significant effect on the Company’s financial statements.
In January 2014, the FASB issued Accounting Standards Update ASU No. 2014-04, “Receivables: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (Topic 310-40).” ASU 2014-04 clarifies that an in-substance repossession or foreclosure occurs upon either the creditor obtaining legal title to the residential real estate property or the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The amendments were effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. Adoption of ASU 2014-04 did not have a significant effect on the Company’s financial statements.
In January 2014, the FASB issued ASU No. 2014-01, “Accounting for Investments in Affordable Housing Projects (Topic 323).” ASU 2014-01 revises the necessary criteria that need to be met in order for an entity to account for investments in affordable housing projects net of the provision for income taxes. It also changes the method of recognition from an effective amortization approach to a proportional amortization approach. Additional disclosures were also set forth in this update. The amendments were effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2014. The amendments were required to be applied retrospectively to all periods presented. Early adoption was permitted and adoption of the standard was optional. Adoption of ASU 2014-01 did not have a material impact on the Company's financial statements.
(2)
RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
In January 2015, Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst, recognized a pretax gain of approximately $1.7 million on one of its investments.
In June 2015, Council Oak Partners, LLC, a wholly-owned subsidiary of the Company, recognized a pretax gain of approximately $5.3 million on one of its investments.
On July 14, 2015, the Company announced it had entered into an agreement to acquire CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang, and El Reno, Oklahoma. See Note (12) Subsequent Event.
(3)
SECURITIES
The following table summarizes securities held for investment and securities available for sale:
June 30, 2015
December 31, 2014
Held for investment, at cost (fair value: $7,991 and $8,671, respectively)
7,923
8,593
Available for sale, at fair value
529,396
516,190
Total
The following table summarizes the amortized cost and estimated fair values of securities held for investment:
Amortized
Cost
Gross
Unrealized
Gains
Losses
Estimated
Fair
Value
Mortgage backed securities (1)
406
26
432
States and political subdivisions
7,517
42
7,559
68
7,991
471
34
505
8,122
44
8,166
78
8,671
The following table summarizes the amortized cost and estimated fair values of securities available for sale:
U.S. treasuries
279,414
1,571
280,985
U.S. federal agencies
165,090
1,055
(28
166,117
23,793
526
(549
23,770
47,560
1,457
(40
48,977
Other securities (2)
9,540
204
(197
9,547
525,397
4,813
(814
248,767
404
(178
248,993
171,641
(175
172,449
26,441
602
(586
26,457
51,706
1,716
(49
53,373
10,798
4,252
(132
14,918
509,353
7,957
(1,120
Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.
Primarily consists of equity securities.
The unrealized gains decreased in 2015 primarily due to the reclassification of an unrealized gain on one investment of $3.3 million from other comprehensive income to a realized gain by Council Oak Partners, LLC, a wholly-owned subsidiary of the Company. The realized gain is reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.
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.
Held for Investment
Contractual maturity of debt securities:
Within one year
1,308
1,317
1,451
1,456
After one year but within five years
6,244
6,277
6,603
6,642
After five years but within ten years
237
249
380
396
After ten years
134
148
159
177
Available for Sale
166,121
166,327
41,772
41,870
256,716
259,037
350,975
352,044
15,810
16,491
21,990
22,717
80,657
81,449
87,252
88,132
Total debt securities
519,304
523,304
501,989
504,763
Equity securities
6,093
6,092
7,364
11,427
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:
Book value of pledged securities
463,877
522,190
(4)
LOANS AND ALLOWANCE FOR LOAN LOSSES
The following is a schedule of loans outstanding by category:
Amount
Percent
Commercial and financial:
Commercial and industrial
741,595
19.22
%
745,106
19.35
Oil & gas production and equipment
88,488
2.29
104,940
2.72
Agriculture
117,729
3.05
132,830
3.45
State and political subdivisions:
17,884
0.46
20,431
0.53
27,687
0.72
20,952
0.54
Real estate:
Construction
363,067
9.41
356,621
9.26
Farmland
148,500
3.85
149,507
3.88
One to four family residences
785,170
20.35
766,362
19.90
Multifamily residential properties
64,366
1.67
66,766
1.73
Commercial
1,200,331
31.11
1,191,477
30.94
Consumer
270,172
7.00
267,179
6.94
Other (not classified above)
33,343
0.87
29,227
0.76
Total loans
100.00
The Company’s loans are mostly to customers within Oklahoma and over 65% 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, 2014.
Nonperforming and Restructured Assets
The following is a summary of nonperforming and restructured assets:
Past due 90 days or more and still accruing
1,311
1,135
Nonaccrual
32,177
16,410
Restructured
15,702
16,515
Total nonperforming and restructured loans
49,190
34,060
Other real estate owned and repossessed assets
7,521
8,079
Total nonperforming and restructured assets
56,711
42,139
Nonaccrual loans, accruing loans past due 90 days or more, and restructured loans are shown in the table above. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $922,000 for the six months ended June 30, 2015 and approximately $481,000 for the six months ended June 30, 2014.
9
Restructured loans consisted primarily of one relationship restructured to defer principal payments. The relationship 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 is 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.
Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate the credit risk component in 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.
Non-residential real estate owner occupied
192
296
Non-residential real estate other
4,937
5,126
Residential real estate permanent mortgage
777
681
Residential real estate all other
1,479
1,796
Non-consumer non-real estate
18,522
1,556
Consumer non-real estate
220
250
Other loans
1,629
1,659
Acquired loans
4,421
5,046
The following table presents an age analysis of past due loans, segregated by class of loans:
Age Analysis of Past Due Loans
30-59
Days
Past Due
60-89
90 Days
and
Greater
Loans
Current
Total Loans
Accruing
Loans 90
Days or
More
As of June 30, 2015
394
492,117
492,511
914
825
1,739
961,559
963,298
865
659
487
2,011
320,538
322,549
219
2,954
233
1,122
4,309
638,649
642,958
326
16,192
1,671
1,300
19,163
919,622
938,785
357
1,403
693
317
2,413
252,336
254,749
213
891
567
485
1,943
155,372
157,315
525
676
1,472
2,673
83,494
86,167
37
23,979
4,499
6,167
34,645
3,823,687
As of December 31, 2014
635
269
904
482,731
483,635
70
377
1,519
952,484
954,003
2,010
758
544
3,312
304,267
307,579
172
1,820
194
1,488
3,502
633,586
637,088
387
841
71
793
1,705
965,002
966,707
24
1,914
711
330
2,955
244,810
247,765
215
1,858
916
741
3,515
149,469
152,984
1,815
997
1,304
4,116
97,521
101,637
267
11,270
3,964
6,294
21,528
3,829,870
10
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.
Unpaid
Principal
Balance
Recorded
Investment
with Allowance
Related
Allowance
Average
386
14
393
22,354
20,184
20,553
1,324
1,107
941
2,122
1,889
202
2,058
19,328
18,879
4,503
6,740
612
597
119
536
2,056
1,628
80
1,699
8,183
5,153
7,120
56,446
49,823
6,319
40,040
521
448
15
453
23,154
21,164
1,364
21,522
1,095
880
1,042
2,480
2,270
299
2,273
1,895
1,580
431
664
648
138
2,101
228
1,512
10,933
7,708
8,082
42,843
36,357
2,560
37,132
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.
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, 2014.
11
The following table presents internal loan grading by class of loans:
Internal Loan Grading
Grade
407,818
78,987
5,455
251
809,293
119,551
29,517
283,951
30,254
7,295
1,049
529,071
101,307
10,608
1,972
773,811
133,243
13,080
18,651
239,719
12,349
2,154
524
150,841
3,511
2,677
286
41,592
30,532
9,277
4,476
3,236,096
509,734
80,063
32,146
293
402,706
75,555
5,008
366
795,209
133,542
20,126
272,411
27,855
6,369
944
529,555
99,214
6,146
2,173
821,094
117,457
26,550
1,606
233,424
12,229
1,548
564
147,758
4,261
601
173
191
46,465
36,951
12,651
5,206
364
3,248,622
507,064
78,999
16,158
555
Allowance for Loan Losses Methodology
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, 2014.
12
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 category of loans does not preclude its availability to absorb losses in other categories.
ALL
Balance at
beginning of
period
Charge-
offs
Recoveries
Net
charge-offs
Provisions
charged to
operations
end of
Three Months Ended June 30, 2015
4,461
9,898
(19
9,880
2,984
(56
(51
3,110
6,578
(7
(3
(90
6,485
13,068
(16
(9
654
13,713
2,327
(103
40
(63
2,499
2,241
(50
240
2,431
(34
(32
32
41,557
(266
59
(207
42,621
Six Months Ended June 30, 2015
4,406
(1
97
9,616
263
2,948
(96
(82
244
6,269
(75
(66
282
12,771
(169
38
(131
1,073
2,404
(230
55
270
2,359
(263
(254
116
(194
28
(166
40,889
(1,028
155
(873
13
Three Months Ended June 30, 2014
5,012
(18
16
5,241
10,685
11,238
31
74
3,310
(44
6,815
9,703
(61
(45
2,309
11,967
2,573
(190
46
(144
216
2,645
2,072
(188
110
(78
1,993
157
(148
678
530
(599
88
39,924
(681
925
43,297
Six Months Ended June 30, 2014
4,827
43
371
11,026
209
2,825
(162
(121
606
6,708
(93
(79
186
8,977
30
(101
3,091
2,556
(331
108
(223
312
1,991
(251
127
(124
126
124
(165
683
518
(554
39,034
(1,155
1,071
(84
The following table details the amount of ALL by class of loans for the period presented, detailed on the basis of the impairment methodology used by the Company.
Individually
evaluated for
impairment
Collectively
Non-residential real estate owner occupied.
214
4,289
4,204
1,851
8,029
1,518
8,098
2,662
407
2,541
935
5,550
743
5,526
5,779
7,934
4,671
8,100
421
2,078
372
2,032
56
2,145
9,704
32,917
8,127
32,762
The following table details the loans outstanding by class of loans for the period presented, on the basis of the impairment methodology used by the Company.
Loans acquired
with deteriorated
credit quality
5,706
486,805
5,374
478,261
34,454
928,844
25,251
928,752
8,344
314,205
7,313
300,266
12,580
630,378
8,319
628,769
31,731
907,054
28,156
938,551
2,682
252,067
2,112
245,653
229
157,086
152,751
72,124
14,043
83,416
18,221
95,726
3,748,563
76,758
3,756,419
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:
2,522
Repossessed assets
424
722
2,946
1,247
(5)
INTANGIBLE ASSETS
The following is a summary of intangible assets:
Carrying
Accumulated
Amortization
Core deposit intangibles
13,198
(6,720
6,478
Customer relationship intangibles
5,699
(2,880
2,819
Mortgage servicing intangibles
595
(211
384
19,492
(9,811
(6,013
7,185
(2,699
3,000
643
(193
450
19,540
(8,905
The following is a summary of goodwill by business segment:
Executive,
Metropolitan
Community
Financial
Operations
Banks
Services
& Support
Consolidated
Balance at December 31, 2014
8,078
30,970
5,464
Impairment
(368
Balance at June 30, 2015
30,602
In June 2015, the Company recorded an impairment loss of $368,000 after adopting a plan in the second quarter to close a small branch and leave a full-service ATM to serve the community.
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, 2014.
(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 June 30, 2015, 39,485 shares were available for future grants. The BancFirst ISOP will terminate on December 31, 2019. The options 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 June 30, 2015 will become exercisable through the year 2022. 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 230,000 shares in May 2014. At June 30, 2015, 20,000 shares were available for future grants. The options 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 June 30, 2015 will become exercisable through the year 2018. 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 stock to satisfy stock-based exercises, but reserves the right to use treasury stock 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:
Wgtd. Avg.
Remaining
Aggregate
Exercise
Contractual
Intrinsic
Options
Price
Term
Outstanding at December 31, 2014
1,029,657
36.55
Options granted
98,000
60.02
Options exercised
(57,250
23.64
Options canceled, forfeited, or expired
(22,500
37.14
Outstanding at June 30, 2015
1,047,907
39.44
8.88 Yr
27,260
Exercisable at June 30, 2015
475,682
31.54
5.21 Yr
16,131
The following table has additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:
Weighted average grant-date fair value per share of options granted
12.07
12.33
11.51
Total intrinsic value of options exercised
1,892
1,301
2,129
2,046
Cash received from options exercised
1,109
1,353
1,642
Tax benefit realized from options exercised
731
503
823
791
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:
Stock-based compensation expense
Tax benefit
112
166
292
300
Stock-based compensation expense, net of tax
178
462
476
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:
Fair value of stock options
4,459
The following table shows the assumptions used for computing stock-based compensation expense under the fair value method during the periods presented:
Risk-free interest rate
1.83 to 2.26%
2.54%
Dividend yield
2.00%
Stock price volatility
18.23 to 19.22%
18.98%
Expected term
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.
17
The following table is a summary of the shares under the program:
Number of shares repurchased
Average price of shares repurchased
Shares remaining to be repurchased
194,723
The Company and BancFirst are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“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 June 30, 2015, 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:
Required
To Be Well
For Capital
Capitalized Under
Adequacy
Prompt Corrective
Actual
Purposes
Action Provisions
Ratio
As of June 30, 2015:
Total Capital
(to Risk Weighted Assets)-
652,100
15.61
334,229
8.00
BancFirst
598,091
14.40
332,259
415,324
10.00
Common Equity Tier 1 Capital
583,479
13.97
188,004
4.50
535,470
12.89
186,896
269,960
6.50
Tier 1 Capital
609,479
14.59
250,672
6.00
555,470
13.37
249,194
(to Total Assets)-
9.45
259,959
4.00
8.62
259,366
324,207
5.00
As of June 30, 2015, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst as “well capitalized” under the regulatory framework from prompt corrective action. The Company’s trust preferred securities have continued to be included in Tier 1 capital as the Company’s total assets do not exceed $15 billion. There are no conditions or events since the most recent notifications of BancFirst’s capital category that management believes would materially change its category under capital requirements existing as of the report date.
Basel III Capital Rules
The Basel III Capital Rules were effective for the Company and BancFirst on January 1, 2015 (subject to a 4-year phase-in period).
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.
Implementation of the deductions and other adjustments to CET1 began 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
18
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 June 30, 2015, 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.
(8)
Basic and diluted net income per common share are calculated as follows:
Income
(Numerator)
Shares
(Denominator)
Per Share
Income available to common stockholders
15,536,325
Effect of stock options
328,599
Income available to common stockholders plus assumed
exercises of stock options
15,864,924
15,468,511
363,669
15,832,180
15,521,916
330,616
15,852,532
15,405,847
353,942
15,759,789
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:
Exercise Price
168,065
58.14
59,286
54.89
148,475
57.94
67,155
54.15
19
(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.
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, registered 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 private label mortgage backed securities and 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 replacement cost, 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 for pricing mentioned in the preceding paragraph 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.
20
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 semi-annually, if impaired. Fair value is estimated based on the present value of future cash flows over 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 the periods presented, 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
Securities available for sale:
U.S. Treasury
Mortgage-backed securities
8,313
15,457
Other securities
3,455
Derivative assets
2,903
Derivative liabilities
1,602
9,425
17,032
3,491
6,124
4,756
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:
June 30
Balance at the beginning of the year
28,909
32,002
Purchases, issuances and settlements
(1,409
(2,287
Sales
(8,593
(499
Gains included in earnings
7,055
382
Total unrealized losses
(4,029
732
Balance at the end of the period
21,933
30,330
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 six months ended June 30, 2015 and 2014, 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 or a direct charge-down of the loan.
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 losses recognized during the period:
Total Fair Value Level 3
As of and for the Year-to-date Period Ended June 30, 2015
Impaired loans (less specific allowance)
43,504
Foreclosed assets
164
27
As of and for the Year-to-date Period Ended December 31, 2014
33,797
730
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.
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.
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.
22
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:
Fair Value
FINANCIAL ASSETS
Level 2 inputs:
Cash and cash equivalents
Securities held for investment
Level 3 inputs:
3,853,964
3,847,791
FINANCIAL LIABILITIES
5,131,120
5,945,502
29,806
31,200
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments
1,666
1,640
Letters of credit
478
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 semi-annually) 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 June 30, 2015 or December 31, 2014.
(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.
23
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:
Oil and Natural Gas Swaps and Options
Notional Units
Notional
(Notional amounts and dollars in thousands)
Oil
Barrels
1,768
4,629
(216
(1,426
(312
(4,271
Natural Gas
MMBTUs
5,525
1,495
(5,525
(176
(2,010
(485
Included in
Other assets
Other liabilities
(1,602
(4,756
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 June 30,
Six Months Ended June 30,
Derivative income
149
298
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 is the profit derived from the activity and is unaffected by market price movements. The Company’s share of total profit is approximately 35%.
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:
Credit exposure
1,503
4,028
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 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:
Eliminations
Net interest income (expense)
15,325
29,444
1,900
(454
Noninterest income
3,533
12,990
11,387
21,326
(20,521
9,800
17,400
6,910
14,604
(20,484
15,372
28,955
1,568
3,463
12,973
6,329
15,919
(15,073
7,484
17,692
2,292
7,680
(15,034
30,725
58,499
3,518
(901
6,990
25,316
38,618
(37,027
19,689
33,807
11,917
24,408
(36,926
29,159
56,196
2,944
(781
6,876
25,239
13,385
31,874
(30,201
15,274
32,769
5,358
17,359
(30,109
Total Assets:
2,262,905
4,093,820
170,089
667,250
(695,166
2,298,828
4,113,783
145,814
679,194
(662,647
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.
(12) SUBSEQUENT EVENT
On July 14, 2015, the Company announced it had entered into an agreement to acquire CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang, and El Reno, Oklahoma. Bank of Commerce has approximately $202 million in total assets, $139 million in loans, $180 million in deposits, and $21 million in equity capital. The transaction is scheduled to be completed during October 2015, and is subject to regulatory approval. The bank will operate under its present name until it is merged into BancFirst, which is expected to be during the fourth quarter of 2015. The acquisition will not have a material effect on the Company’s consolidated financial statements.
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, 2014 consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 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. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
Local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact.
Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.
Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.
Inflation, interest rate, crude oil price, securities market and monetary fluctuations.
The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company must comply.
Impairment of the Company’s goodwill or other intangible assets.
Changes in consumer spending, borrowing and savings habits.
Changes in the financial performance and/or condition of the Company’s borrowers.
Technological changes.
Acquisitions and integration of acquired businesses.
The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
The Company’s success at managing the risks involved in the foregoing items.
Actual results may differ materially from forward-looking statements.
SUMMARY
BancFirst Corporation’s net income was $18.6 million, or $1.17 diluted earnings per share, for the second quarter of 2015, compared to net income of $14.7 million, or $0.92 diluted earnings per share, for the second quarter of 2014. Net income was $34.8 million, or $2.20 diluted earnings per share for the six months ended June 30, 2015, compared to $29.3 million, or $1.86 diluted earnings per share, for the six months ended June 30, 2014.
The Company’s net interest income for the second quarter of 2015 increased to $46.2 million, compared to $45.5 million for the second quarter of 2014, due to higher volume of earning assets. The net interest margin for the quarter was 3.07%, compared to 3.10% a year ago. The Company’s provision for loan losses for the second quarter of 2015 decreased to $1.3 million, compared to $3.1 million a year ago. The higher provision for loan losses in the second quarter of 2014 was due in part to an additional $2 million allowance for a single commercial loan that was adversely graded during the quarter. Net charge-offs for the quarter were only 0.01% of average loans, compared to net recoveries of 0.01% for the second quarter of 2014. Noninterest income for the quarter totaled $28.7 million, compared to $23.6 million last year. Noninterest income increased due to the Company recording a gain from the sale of an investment by the Company’s wholly-owned subsidiary, Council Oak Partners, LLC, of approximately $5.3 million. Noninterest expense for the quarter totaled $45.4 million, compared to $45.9 million last year. The Company recorded a goodwill impairment loss of approximately $368,000, which is included in noninterest expense for the second quarter of 2015. The Company’s effective tax rate increased to 34.3% compared to 27.0% for the second quarter of 2014, due primarily to tax credits purchased in 2014 that lowered the effective tax rate.
At June 30, 2015, the Company’s total assets were $6.5 billion, largely unchanged from December 31, 2014. Securities increased $12.5 million to a total of $537.3 million. Loans totaled $3.8 billion, a slight increase from December 31, 2014. Deposits totaled $5.8 billion, virtually flat from December 31, 2014. The Company’s total stockholders’ equity was $634.2 million, an increase of $24.9 million, or 4.1%, over December 31, 2014.
Asset quality remained strong during the second quarter of 2015. Nonperforming and restructured assets were 0.87% of total assets at June 30, 2015 compared to 0.64% at December 31, 2014. During the second quarter the Company’s nonaccrual loans increased due to the downgrade of a single commercial loan. The allowance to total loans was 1.10%, compared to 1.06% at year-end 2014.
On July 14, 2015 the Company announced it had entered into an agreement to acquire CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang, and El Reno, Oklahoma. Bank of Commerce has approximately $202 million in total assets, $139 million in loans, $180 million in deposits, and $21 million in equity capital. The transaction is scheduled to be completed during October 2015, and is subject to regulatory approval. The bank will operate under its present name until it is merged into BancFirst, which is expected to be during the fourth quarter of 2015. The acquisition will not have a material effect on the Company’s consolidated financial statements.
Oil prices continued to be low during the second quarter of 2015, which had an impact on our loan demand. We expect any continued impact from low oil prices on Oklahoma’s economy will become more apparent in future periods.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.
See Note (11) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.
RESULTS OF OPERATIONS
Selected income statement data and other selected data for the comparable periods were as follows:
SELECTED CONSOLIDATED FINANCIAL DATA
Income Statement Data
Per Common Share Data
Net income – basic
Net income – diluted
Cash dividends
0.34
0.31
0.68
0.62
Performance Data
Return on average assets
1.14
1.08
Return on average stockholders’ equity
11.79
10.20
11.23
10.35
Cash dividend payout ratio
28.47
32.99
30.32
32.55
Net interest spread
2.93
2.96
2.90
Net interest margin
3.07
3.10
3.04
Efficiency ratio
60.63
66.36
61.95
66.59
Net charge-offs to average loans
0.01
(0.01
0.02
Net Interest Income
For the three months ended June 30, 2015, net interest income, which is the Company’s principal source of operating revenue, increased to $46.2 million compared to $45.5 million for the three months ended June 30, 2014, due to higher volume of earning assets. 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 for the quarter was 3.07% compared to 3.10% a year ago. If interest rates and/or loan volume do not increase, management would expect its net interest margin to continue to compress in 2015 as higher yielding loans and securities mature and are replaced at current market rates.
Net interest income for the six months ended June 30, 2015 was $91.8 million compared to $87.5 million for the six months ended June 30, 2014. The net interest margin for the year-to-date increased slightly compared to the same period of the previous year, as shown in the preceding table.
Provision for Loan Losses
The Company’s provision for loan loss for the second quarter of 2015 decreased to $1.3 million compared to $3.1 million a year ago. The higher provision for loan losses in the second quarter of 2014 was due in part to an additional $2 million allowance for a single commercial loan that was adversely graded during the quarter. The Company establishes an allowance as an estimate of the probable inherent losses in the loan portfolio at the balance sheet date. 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 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 $207,000 for the second quarter of 2015, compared to net recoveries of $244,000 for the second quarter of 2014. The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at a very low level.
For the six months ended June 30, 2015, the Company’s provision for loan losses was $2.6 million, compared to $4.3 million for the six months ended June 30, 2014. Net loan charge-offs were $873,000, compared to $84,000 for the same period of the prior year.
Noninterest Income
Noninterest income totaled $28.7 million for the second quarter of 2015 compared to $23.6 million for the second quarter of 2014. Noninterest income increased due to the Company recording a gain from the sale of an investment by the Company’s wholly-owned subsidiary Council Oak Partners, LLC, of approximately $5.3 million. The Company had fees from debit card usage totaling $5.8 million and $5.7 million during the three month periods ended June 30, 2015 and 2014, respectively.
Noninterest income for the six months ended June 30, 2015 totaled $54.0 million compared to $47.2 million for the six months ended June 30, 2014. Noninterest income increased due to the Company recording a gain from the sale of an investment by the Company’s wholly-owned subsidiary Council Oak Partners, LLC, of approximately $5.3 million and a $1.7 million gain on the sale of an investment by Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst. Fees from debit card usage totaled $11.3 million and $11.1 million during the six months ended June 30, 2015 and 2014, respectively.
Noninterest Expense
For the three months ended June 30, 2015, noninterest expense totaled $45.4 million, compared to $45.9 million for the three months ended June 30, 2014. The Company recorded an impairment loss of $368,000, which is included in noninterest expense, after adopting a plan in the second quarter of 2015 to close a small branch and leave a full service ATM to serve the community. Noninterest expense for the second quarter of 2014 included acquisition costs for The Bank of Union of $1.6 million partly offset by a gain on sale of other real estate owned property of approximately $500,000.
For the six months ended June 30, 2015, noninterest expense totaled $90.4 million compared to $89.7 million for the six months ended June 30, 2014. The increase in noninterest expense for year-to-date 2015 was mainly due to annual salary increases. Noninterest expense for year-to-date 2014 included acquisition costs of $2.0 million for The Bank of Union, partly offset by a gain on sale of other real estate owned property of approximately $500,000.
Income Taxes
The Company’s effective tax rate on income before taxes increased to 34.3% for the second quarter of 2015, compared to 27.0% for the second quarter of 2014, due primarily to tax credits purchased in 2014 that lowered the effective tax rate.
The Company’s effective tax rate on income before taxes was 34.2% for the first six months of 2015, compared to 27.8% for the first six months of 2014 due primarily to tax credit purchased in 2014 that lowered the effective tax rate and the recognition of state deferred tax benefits in 2014.
29
FINANCIAL POSITION
Balance Sheet Data
Securities
Stockholders' equity
Book value per share
40.76
39.30
Tangible book value per share
37.27
35.71
Average loans to deposits (year-to-date)
65.90
63.64
Average earning assets to total assets (year-to-date)
93.04
92.71
Average stockholders’ equity to average assets (year-to-date)
9.59
9.19
Asset Quality Ratios
Nonperforming and restructured loans to total loans
1.27
0.88
Nonperforming and restructured assets to total assets
0.64
Allowance for loan losses to total loans
1.10
1.06
Allowance for loan losses to nonperforming and restructured loans
86.65
120.05
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 June 30, 2015 totaled $1.8 billion, virtually flat from December 31, 2014. 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%.
At June 30, 2015, total securities increased $12.5 million compared to December 31, 2014. 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 $4.0 million at June 30, 2015, compared to an unrealized gain of $6.8 million at December 31, 2014. These unrealized gains are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of $2.5 million and $4.2 million, respectively. The unrealized gains decreased in 2015 primarily due to the reclassification of an unrealized gain on one investment of $3.3 million from other comprehensive income to realized gain by Council Oak Partners, LLC, a wholly-owned subsidiary of the Company. The realized gain is reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.
Loans (Including Acquired Loans)
At June 30, 2015, loans totaled $3.9 billion, with no material change from December 31, 2014. Loan growth during the first half of 2015 slowed in part due to the effect of lower oil prices on the Oklahoma economy.
Allowance for Loan Losses/Fair Value Adjustments on Acquired Loans
At June 30, 2015, the allowance for loan losses to total loans represented 1.10% of total loans, compared to 1.06% at December 31, 2014. The increase was mainly due to higher adversely classified loans.
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 $3.5 million at June 30, 2015 and $4.3 million at December 31, 2014 while the acquired loans outstanding were $86.2 million and $101.7 million, respectively. The decrease in the credit component in 2015 was due to loan payoffs and accretion.
Nonperforming and restructured assets totaled $56.7 million at June 30, 2015, compared to $42.1 million at December 31, 2014. The Company’s level of nonperforming and restructured assets has continued to be relatively low.
Nonaccrual loans totaled $32.2 million at June 30, 2015, compared to $16.4 million at the end of 2014. 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 $922,000 for the six months ended June 30, 2015 and $481,000 for the six months ended June 30, 2014. Only a small amount of this interest is expected to be ultimately collected. During the second quarter of 2015 the Company’s nonaccrual loans increased due to the downgrade of a single commercial loan.
Other real estate owned and repossessed assets totaled $7.5 million at June 30, 2015, compared to $8.1 million at December 31, 2014. Other real estate owned and repossessed assets decreased due to the sale of two properties during the first quarter of 2015, partially offset by an addition in the second quarter.
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 $7.6 million of these loans at June 30, 2015, compared to $27.5 million at December 31, 2014. 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. Potential problem loans decreased due to the downgrade of a single commercial loan that was moved to nonaccrual during the second quarter.
Liquidity and Funding
At June 30, 2015, deposits totaled $5.8 billion, virtually flat compared to December 31, 2014. 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 94.2% at June 30, 2015 compared to 94.1% at December 31, 2014. Noninterest-bearing deposits to total deposits were 40.0% at June 30, 2015, compared to 40.8% at December 31, 2014.
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 $2.1 million at June 30, 2015, compared to $4.0 million at December 31, 2014.
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 $637.6 million, are pledged as collateral for the borrowings under the line of credit. As of June 30, 2015 and December 31, 2014, the Company had no advances outstanding.
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, 2014.
Capital Resources
Stockholders’ equity totaled $634.2 million at June 30, 2015, compared to $609.3 million at December 31, 2014. In addition to net income of $34.8 million, other changes in stockholders’ equity during the six months ended June 30, 2015 included $1.7 million related to stock option exercises and $754,000 related to stock-based compensation that were partially offset by a $1.7 million decrease in other comprehensive income and $10.6 million in dividends. The Company’s leverage ratio and total risk-based capital ratios at June 30, 2015, were well in excess of the regulatory requirements.
See Note (7) of the Notes to 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, 2014.
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
Taxable Equivalent Basis (Dollars in thousands)
Interest
Income/
Yield/
Expense
Rate
Earning assets:
Loans (1)
3,853,995
46,601
4.85
3,602,491
45,929
5.11
Securities – taxable
508,819
1.15
530,482
Securities – tax exempt
37,567
363
3.87
40,870
4.13
Interest-bearing deposits w/ banks & FFS
1,678,617
0.25
1,748,422
Total earning assets
6,078,998
49,488
3.27
5,922,265
48,948
3.32
Nonearning assets:
176,745
184,984
Interest receivable and other assets
315,018
323,312
(41,946
(40,567
Total nonearning assets
449,817
467,729
6,528,815
6,389,994
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits
735,460
183
0.10
810,729
208
Savings deposits
2,068,549
1,159
0.22
1,975,496
1,113
0.23
Time deposits
729,834
1,200
0.66
804,779
1,412
0.70
1,964
0.14
10,270
0.20
2.22
7.35
7.37
Total interest-bearing liabilities
3,562,611
3,629,386
0.36
Interest-free funds:
Noninterest-bearing deposits
2,310,375
2,159,268
Interest payable and other liabilities
24,653
23,769
Stockholders’ equity
631,176
577,571
Total interest free funds
2,966,204
2,760,608
Total liabilities and stockholders’ equity
46,454
45,711
Effect of interest free funds
Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.
33
3,847,450
92,652
4.86
3,542,572
88,643
5.05
497,687
1.16
507,817
1.11
38,282
3.90
41,037
851
4.18
1,682,494
0.26
1,744,071
2,191
6,065,913
98,378
5,835,497
94,492
179,326
192,538
315,780
315,690
(41,415
(39,916
453,691
468,312
6,519,604
6,303,809
729,716
351
785,675
2,060,781
2,308
1,966,302
2,216
736,691
2,421
802,927
2,900
0.73
2,496
7,892
0.18
3,297
1.53
7.38
7.39
3,556,488
3,592,897
0.37
2,311,291
2,123,644
26,633
15,635
625,192
571,633
2,963,116
2,710,912
92,314
87,955
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, 2014, 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 its Disclosure Committee, which includes the Company’s Chief Risk Officer, Chief Asset Quality Officer, Chief Internal Auditor, Controller, and General Counsel, have evaluated, as of the last day of the period covered by this report, 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 materially affected, or are 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 June 30, 2015, 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, 2014.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
ExhibitNumber
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 and Restated By-Laws of BancFirst Corporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated March 30, 2015 and incorporated herein by reference).
3.4
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
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).
4.3
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).
4.4
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 to the Company’s registration statement on Form S-3, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).
4.5
Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (filed as Exhibit 4.2 to the Company’s registration statement on Form S-3, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).
4.6
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).
10.1
BancFirst Corporation Employee Stock Ownership and Trust Agreement adopted effective January 1, 2015 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2015 and incorporated herein by reference).
10.2
Fourth Amended and Restated BancFirst Corporation Directors’ Stock Option Plan (filed as Exhibit 10.1 to the Company’s Form 8-K dated October 28, 2014 and incorporated herein by reference).
10.3
Fourth Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2014 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 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).
10.6
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).
10.7
Thirteenth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.1 to the Company’s Form 8-K dated October 28, 2014 and incorporated herein by reference).
31.1*
Chief Executive Officer’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).
36
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.
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.
(Registrant)
Date: August 7, 2015
/s/ David E. Rainbolt
David E. Rainbolt
President
Chief Executive Officer
(Principal Executive Officer)
/s/ Kevin Lawrence
Kevin Lawrence
Executive Vice President
Chief Financial Officer
(Principal Financial Officer)