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 March 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-14384
BancFirst Corporation
(Exact name of registrant as specified in charter)
Oklahoma
73-1221379
(State or other Jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
101 N. Broadway, Oklahoma City, Oklahoma
73102-8405
(Address of principal executive offices)
(Zip Code)
(405) 270-1086
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
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 April 29, 2016 there were 15,546,253 shares of the registrant’s Common Stock outstanding.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
March 31,
December 31,
2016
2015
(unaudited)
(see Note 1)
ASSETS
Cash and due from banks
$
169,969
203,364
Interest-bearing deposits with banks
1,498,356
1,394,813
Securities (fair value: $498,041 and $553,010, respectively)
497,986
552,949
Loans held for sale
7,626
13,725
Loans (net of unearned interest)
4,275,112
4,232,048
Allowance for loan losses
(44,571
)
(41,666
Loans, net of allowance for loan losses
4,230,541
4,190,382
Premises and equipment, net
127,093
126,813
Other real estate owned
3,963
7,984
Intangible assets, net
15,093
15,695
Goodwill
54,042
Accrued interest receivable and other assets
136,269
133,062
Total assets
6,740,938
6,692,829
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing
2,413,700
2,409,769
Interest-bearing
3,597,172
3,563,589
Total deposits
6,010,872
5,973,358
Short-term borrowings
1,300
500
Accrued interest payable and other liabilities
34,146
31,502
Junior subordinated debentures
31,959
Total liabilities
6,078,277
6,037,319
Stockholders' equity:
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued
—
Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued
Common stock, $1.00 par, 20,000,000 shares authorized; shares issued and
outstanding: 15,527,804 and 15,597,446, respectively
15,528
15,597
Capital surplus
103,978
102,865
Retained earnings
541,098
535,521
Accumulated other comprehensive income, net of income tax of $1,297
and $962, respectively
2,057
1,527
Total stockholders' equity
662,661
655,510
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
INTEREST INCOME
Loans, including fees
50,195
45,949
Securities:
Taxable
1,327
1,399
Tax-exempt
255
246
1,802
1,062
Total interest income
53,579
48,656
INTEREST EXPENSE
Deposits
3,080
2,538
1
522
491
Total interest expense
3,603
3,030
Net interest income
49,976
45,626
Provision for loan losses
4,103
1,334
Net interest income after provision for loan losses
45,873
44,292
NONINTEREST INCOME
Trust revenue
2,465
2,342
Service charges on deposits
14,710
13,352
Securities transactions (includes accumulated other comprehensive income reclassifications of $100 and $606, respectively)
100
1,729
Income from sales of loans
562
440
Insurance commissions
4,135
4,068
Cash management
2,318
1,819
Gain on sale of other assets
4
40
Other
1,323
1,506
Total noninterest income
25,617
25,296
NONINTEREST EXPENSE
Salaries and employee benefits
29,357
27,513
Occupancy, net
2,827
2,835
Depreciation
2,530
2,464
Amortization of intangible assets
581
444
Data processing services
1,215
1,117
Net expense from other real estate owned
(1,141
314
Marketing and business promotion
1,855
1,679
Deposit insurance
839
826
8,228
7,731
Total noninterest expense
46,291
44,923
Income before taxes
25,199
24,665
Income tax expense
8,620
8,406
Net income
16,579
16,259
NET INCOME PER COMMON SHARE
Basic
1.07
1.05
Diluted
1.03
OTHER COMPREHENSIVE INCOME
Unrealized gains on securities, net of tax of $(374) and $(700), respectively
591
1,111
Reclassification adjustment for gains included in net income, net of tax of $39 and $234, respectively
(61
(372
Other comprehensive gains, net of tax of $(335) and $(466), respectively
530
739
Comprehensive income
17,109
16,998
3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
COMMON STOCK
Issued at beginning of period
15,504
Shares issued
31
8
Shares acquired and canceled
(100
Issued at end of period
15,512
CAPITAL SURPLUS
Balance at beginning of period
96,841
Common stock issued
871
236
Tax effect of stock options
(209
(64
Stock-based compensation arrangements
451
464
Balance at end of period
97,477
RETAINED EARNINGS
492,776
Dividends on common stock ($0.36 and $0.34 per share, respectively)
(5,579
(5,277
Common stock acquired and canceled
(5,423
503,758
ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized gains on securities:
4,193
Net change
4,932
Total stockholders’ equity
621,679
CONSOLIDATED STATEMENTS OF CASH FLOW
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization
3,111
2,908
Net amortization of securities premiums and discounts
148
Realized securities gains
(1,729
Gain on sales of loans
(562
(440
Cash receipts from the sale of loans originated for sale
40,271
36,163
Cash disbursements for loans originated for sale
(33,610
(37,393
Deferred income tax benefit
(829
(586
(Gain)/loss on other assets
(1,222
207
Increase in interest receivable
(176
(356
Increase/(decrease) in interest payable
13
(20
Amortization of stock-based compensation arrangements
Other, net
300
5,855
Net cash provided by operating activities
28,477
22,814
INVESTING ACTIVITIES
Net increase in federal funds sold
(1,000
Purchases of available for sale securities
(30,740
Proceeds from maturities, calls and paydowns of held for investment securities
410
311
Proceeds from maturities, calls and paydowns of available for sale securities
55,071
6,144
Proceeds from sales of available for sale securities
299
Net change in loans
(45,010
3,613
Purchases of premises, equipment and computer software
(2,939
(4,107
Proceeds from the sale of other assets
5,971
1,955
Net cash provided by (used in) investing activities
13,802
(22,095
FINANCING ACTIVITIES
Net change in deposits
37,514
(20,903
Net increase/(decrease) in short-term borrowings
800
(1,939
Issuance of common stock, net
693
180
Common stock acquired
(5,523
Cash dividends paid
(5,615
(5,271
Net cash provided by (used in) financing activities
27,869
(27,933
Net increase/(decrease) in cash, due from banks and interest-bearing deposits
70,148
(27,214
Cash, due from banks and interest-bearing deposits at the beginning of the period
1,598,177
1,913,895
Cash, due from banks and interest-bearing deposits at the end of the period
1,668,325
1,886,681
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest
3,591
3,050
Cash paid during the period for income taxes
1,050
600
Noncash investing and financing activities:
Unpaid common stock dividends declared
5,579
5,271
5
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, 2015.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc. and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc. and BancFirst Agency, Inc. All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.
The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
The unaudited interim consolidated financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2015, the date of the most recent annual report.
Reclassifications
Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.
Recent Accounting Pronouncements
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 will be effective on January 1, 2017 and is not expected to have a significant impact on the Company’s financial statements.
6
In February 2016, the FASB issued ASU No. 2016-02, “Leases - (Topic 842).” ASU 2016-02 requires that lessees recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. Adoption of ASU 2016-02 is not expected to have a significant effect on the Company’s financial statements.
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10).” ASU 2016-01 require all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. In addition, the amendment will require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Adoption of ASU 2016-01 is not expected to have a significant 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 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.
(2)
RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
On October 8, 2015, the Company completed its acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang and El Reno, Oklahoma. Bank of Commerce had approximately $196 million in total assets, $147 million in loans, $175 million in deposits and $22 million in equity capital. The acquisition was accounted for under the acquisition method and the Company acquired 100% of the voting interest. Bank of Commerce operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on November 13, 2015. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $7.1 million and goodwill of approximately $9.4 million. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. The acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce will complement our community banking strategy by adding two communities to our banking network throughout Oklahoma.
During the quarter ended March 31, 2016, the Company had gains on the sale of other real estate owned totaling $1.2 million that is included in net expense from other real estate owned on the consolidated statements of comprehensive income.
(3)
SECURITIES
The following table summarizes securities held for investment and securities available for sale:
March 31, 2016
December 31, 2015
Held for investment, at cost (fair value: $8,434 and $8,850, respectively)
8,379
8,789
Available for sale, at fair value
489,607
544,160
Total
7
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)
323
25
348
States and political subdivisions
7,556
30
7,586
Other securities
55
8,434
347
372
7,942
36
7,978
61
8,850
The following table summarizes the amortized cost and estimated fair values of securities available for sale:
U.S. treasuries
279,020
1,695
280,715
U.S. federal agencies
128,391
539
(76
128,854
21,444
415
(550
21,309
47,904
1,473
(85
49,292
Other securities (2)
9,494
125
(182
9,437
486,253
4,247
(893
328,965
776
(45
329,696
131,522
527
(153
131,896
21,973
425
(543
21,855
49,521
1,447
(48
50,920
9,689
249
(145
9,793
541,670
3,424
(934
Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.
Primarily consists of equity securities.
Realized gains are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income. In January 2015, Council Oak Investment Corporation, a wholly-owned subsidiary of BancFirst, recognized a pretax gain of approximately $1.7 million on one of its investments.
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
4,983
4,990
5,168
5,174
After one year but within five years
2,594
2,617
2,800
2,829
After five years but within ten years
778
802
795
319
After ten years
24
26
528
Available for Sale
224,616
224,814
272,820
272,779
175,071
177,377
178,617
180,145
7,794
8,359
8,483
9,075
72,746
73,052
75,522
75,853
Total debt securities
480,227
483,602
535,442
537,852
Equity securities
6,026
6,005
6,228
6,308
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
458,893
493,540
(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
790,156
18.48
%
795,803
18.80
Oil & gas production and equipment
86,524
2.02
87,304
2.06
Agriculture
149,442
3.50
150,620
3.56
State and political subdivisions:
17,628
0.41
17,605
0.42
36,177
0.85
33,575
0.79
Real estate:
Construction
401,330
9.39
403,664
9.54
Farmland
189,934
4.44
184,707
4.36
One to four family residences
825,357
19.31
821,251
19.41
Multifamily residential properties
62,189
1.45
65,477
1.55
Commercial
1,406,204
32.89
1,356,430
32.05
Consumer
276,463
6.47
283,636
6.70
Other (not classified above)
33,708
31,976
0.76
Total loans
100.00
9
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, 2015.
Nonperforming and Restructured Assets
The following is a summary of nonperforming and restructured assets:
Past due 90 days or more and still accruing
1,099
1,841
Nonaccrual
31,040
30,096
Restructured
533
15,143
Total nonperforming and restructured loans
32,672
47,080
Other real estate owned and repossessed assets
4,245
8,214
Total nonperforming and restructured assets
36,917
55,294
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 $513,000 for the three months ended March 31, 2016 and approximately $310,000 for the three months ended March 31, 2015.
Restructured loans consisted primarily of one relationship restructured in prior periods to defer certain principal payments. This relationship was re-evaluated and removed from restructured loans in 2016 due to sustained improvement in financial condition, performance and the commercially reasonable nature of its structure. 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
261
Non-residential real estate other
3,952
3,957
Residential real estate permanent mortgage
656
Residential real estate all other
4,548
1,833
Non-consumer non-real estate
8,283
10,159
Consumer non-real estate
301
312
Other loans
9,343
9,381
Acquired loans
3,441
3,537
10
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 March 31, 2016
1,130
17
254
1,401
510,687
512,088
3,563
285
3,848
1,135,560
1,139,408
238
3,076
632
1,003
4,711
325,107
329,818
445
5,652
339
775
6,766
693,107
699,873
113
2,825
130
487
3,442
975,485
978,927
92
1,862
676
344
2,882
261,565
264,447
168
1,023
7,934
9,304
153,567
162,871
12
1,252
419
615
2,286
185,394
187,680
20,383
2,560
11,697
34,640
4,240,472
As of December 31, 2015
441
179
183
803
502,094
502,897
1,149
108
568
1,825
1,108,935
1,110,760
521
2,840
636
648
4,124
328,477
332,601
493
2,842
609
824
4,275
672,414
676,689
193
2,278
161
187
2,626
982,136
984,762
152
2,237
772
349
3,358
265,511
268,869
278
3,565
295
1,761
5,621
156,995
162,616
132
1,052
71
918
2,041
190,813
192,854
72
16,404
2,831
5,438
24,673
4,207,375
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 Company offers Small Business Administration (“SBA”) guaranteed loans through its Commercial Capital division to expand access to capital for creditworthy small businesses at reasonable terms. The SBA does not provide funds to the borrower, instead, the SBA guarantees a portion of the lender’s loan, which is conditional based on the lender following certain requirements established by the SBA. Typically, if the borrower defaults the SBA pays off the guaranteed portion of the remaining loan balance. However, if any of these requirements are not followed, the SBA can either deny a request for purchase of its guaranteed portion, or reduce the amount of its purchase by the amount of any loss. Because of the volume of SBA guaranteed loans, from time to time the Company may be in negotiation with the SBA regarding the amount of a guarantee that is collectable. If a request is denied, the Company could be required to record additional charge-offs of the previously guaranteed portion of the loan. As of the filing date, collectability on the guarantee for an SBA loan was uncertain; however, the amount of loss, if any, was not estimable.
11
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
15
418
6,207
4,190
157
15,123
1,498
1,305
86
1,276
5,101
4,823
1,382
2,781
12,762
8,375
2,017
9,190
652
120
745
10,705
9,355
459
9,892
6,276
3,745
3,977
43,816
32,889
4,236
43,402
507
383
14
446
21,068
19,052
357
19,655
1,209
81
1,125
2,498
2,235
242
1,958
13,897
10,312
2,062
11,786
738
715
181
10,722
9,513
331
10,335
6,295
4,248
4,564
57,126
47,667
3,268
50,521
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, 2015.
The following table presents internal loan grading by class of loans:
Internal Loan Grading
Grade
423,003
77,243
11,470
966,113
163,932
5,379
3,984
290,540
30,941
7,043
1,294
574,683
112,736
7,649
4,805
809,004
136,143
25,513
8,267
247,419
14,419
2,099
510
153,486
5,629
1,336
2,420
159,016
13,924
10,991
3,674
75
3,623,264
554,967
71,480
25,326
417,529
76,749
8,304
315
945,993
156,159
4,580
4,028
295,265
29,793
6,315
1,228
554,007
111,879
9,109
1,694
821,394
140,384
12,687
10,297
251,994
14,433
1,779
662
153,416
5,851
872
2,477
165,305
12,566
11,049
3,858
76
3,604,903
547,814
54,695
24,559
77
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, 2015.
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 March 31, 2016
4,661
(1
172
4,832
9,921
290
10,211
3,148
(50
(33
49
3,164
6,725
(67
(63
7,989
11,754
(803
(792
1,851
12,813
2,642
(221
38
(183
94
2,553
2,648
(133
(127
269
2,790
167
(4
51
219
41,666
(1,280
82
(1,198
44,571
Three Months Ended March 31, 2015
4,406
4,461
9,616
282
9,898
2,948
(40
(31
67
2,984
6,269
(68
6,578
12,771
(122
13,068
2,404
(112
35
2,327
2,359
(213
(204
2,241
116
(160
(134
18
40,889
(762
96
(666
41,557
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.
4,388
4,338
351
9,860
9,598
438
2,726
399
2,749
1,926
6,063
5,886
4,539
8,274
3,365
8,389
396
2,157
2,197
413
2,377
291
2,357
8,507
36,064
5,985
35,681
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
11,843
500,245
8,619
494,278
9,363
1,130,045
8,608
1,102,152
8,337
321,481
7,543
325,058
12,453
687,420
10,803
665,886
33,780
945,147
22,983
961,779
2,596
261,851
2,416
266,453
2,216
160,655
2,323
160,293
172,940
14,740
177,871
14,983
80,588
4,179,784
63,295
4,153,770
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:
260
Repossessed assets
404
220
748
480
(5)
INTANGIBLE ASSETS
The following is a summary of intangible assets:
Carrying
Accumulated
Amortization
Core deposit intangibles
18,659
(6,402
12,257
Customer relationship intangibles
5,699
(3,151
2,548
Mortgage servicing intangibles
525
(237
288
24,883
(9,790
20,333
(7,586
12,747
(3,061
2,638
538
(228
310
26,570
(10,875
The following is a summary of goodwill by business segment:
Executive,
Metropolitan
Community
Financial
Operations
Banks
Services
& Support
Consolidated
Three month ended March 31, 2016
Balance at beginning and end of period
8,078
40,050
5,464
450
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, 2015.
(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 March 31, 2016, 5,735 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 March 31, 2016 will become exercisable through the year 2023. 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 March 31, 2016, 10,000 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 March 31, 2016 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.
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
(Dollars in thousands, except option data)
Outstanding at December 31, 2015
1,018,149
40.69
Options granted
15,000
55.15
Options exercised
(29,600
29.56
Options canceled, forfeited, or expired
(5,000
41.02
Outstanding at March 31, 2016
998,549
41.24
8.83 Yrs
15,767
Exercisable at March 31, 2016
486,874
33.47
5.55 Yrs
11,471
The following table has additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:
(Dollars in thousands except per share data)
Weighted average grant-date fair value per share of options granted
11.47
11.00
Total intrinsic value of options exercised
779
237
Cash received from options exercised
875
244
Tax benefit realized from options exercised
16
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
174
Stock-based compensation expense, net of tax
277
284
The Company will continue to amortize the unearned stock-based compensation expense over the remaining vesting period of approximately seven years. The following table shows the unearned stock-based compensation expense:
Unearned stock-based compensation expense
3,834
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
1.91 to 2.02%
1.83 to 1.96%
Dividend yield
2.00%
Stock price volatility
20.41 to 20.64%
18.23 to 18.50%
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.
In May 1999, the Company adopted the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “BancFirst Deferred Stock Compensation Plan”). The Company amended the BancFirst Deferred Stock Compensation Plan to increase the number of shares to be issued under the plan to 91,110 shares in May 2014. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100% of their board fees. They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member. Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account. The number of shares of common stock distributed from the BancFirst Deferred Stock Compensation Plan was 758 during the three months ended March 31, 2016.
A summary of the accumulated stock units is as follows:
Accumulated stock units
67,558
66,376
Average price
40.17
39.64
(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 within the limitations of a Board approved share buyback program.
The following table is a summary of the shares under the program:
Number of shares repurchased
100,000
Average price of shares repurchased
55.23
Shares remaining to be repurchased
66,276
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 March 31, 2016, 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
With
Capitalized Under
Adequacy
Capital Conservation
Prompt Corrective
Actual
Purposes
Buffer
Action Provisions
Ratio
As of March 31, 2016:
Total Capital
(to Risk Weighted Assets)-
673,104
14.40%
373,849
8.00%
403,056
8.625%
BancFirst
616,209
13.20%
373,346
402,513
466,682
10.00%
Common Equity Tier 1 Capital
597,533
12.79%
210,290
4.50%
239,497
5.125%
551,638
11.82%
210,007
239,174
303,343
6.50%
Tier 1 Capital
628,533
13.45%
280,387
6.00%
309,594
6.625%
571,638
12.25%
280,009
309,177
(to Total Assets)-
9.51%
264,328
4.00%
8.68%
263,405
329,256
5.00%
As of March 31, 2016, 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
Under the Basel III Capital Rules, 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 began on January 1, 2016 at the 0.625% level and will 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 March 31, 2016, 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 based on weighted-average shares outstanding are calculated as follows:
Income
(Numerator)
Shares
(Denominator)
Per Share
Income available to common stockholders
15,534,416
Dilutive effect of stock options
281,955
Income available to common stockholders plus assumed
exercises of stock options
15,816,371
15,507,346
331,202
15,838,548
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
236,451
58.59
128,667
57.68
(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.
19
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.
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
6,493
14,816
3,432
Derivative assets
1,210
Derivative liabilities
605
7,039
3,485
1,946
989
20
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:
Balance at the beginning of the year
21,124
28,459
Purchases, issuances and settlements
(744
Sales
(299
Gains included in earnings
Total unrealized (losses) gains
(589
Balance at the end of the period
20,821
27,126
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 three months ended March 31, 2016 and 2015, the Company did not transfer any securities between levels in the fair value hierarchy.
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 March 31, 2016
Impaired loans (less specific allowance)
28,653
Foreclosed assets
281
As of and for the Year-to-date Period Ended December 31, 2015
44,399
230
128
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:
21
Cash and Cash Equivalents Include: Cash and Due from Banks 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.
Short-term Borrowings
The amounts payable on these short-term instruments are reasonable estimates of fair value.
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
7,879
8,289
8,350
Level 3 inputs:
4,286,603
4,222,153
FINANCIAL LIABILITIES
6,061,676
5,973,538
6,028,012
34,886
33,793
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments
1,634
1,681
Letters of credit
443
22
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 March 31, 2016 or December 31, 2015.
(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:
Oil and Natural Gas Swaps and Options
Notional Units
Notional
(Notional amounts and dollars in thousands)
Oil
Barrels
98
107
604
(98
(5
(86
(378
Natural Gas
MMBTUs
3,230
1,103
3,920
1,342
(3,230
(600
(3,920
(611
Included in
Other assets
Other liabilities
(605
(989
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 March 31,
Derivative income
155
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
37
23
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)
15,843
33,122
1,416
(405
Noninterest income
3,788
13,596
7,479
17,678
(16,924
9,348
19,094
3,114
10,500
(16,857
15,400
29,055
1,618
(447
3,457
12,326
8,727
17,292
(16,506
9,889
16,407
5,007
9,804
(16,442
Total Assets:
2,307,503
4,401,449
127,748
628,843
(724,605
2,277,870
4,379,205
128,697
624,428
(717,371
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.
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, 2015 consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 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 for the first quarter of 2016 was $16.6 million, compared to $16.3 million for the first quarter of 2015. Diluted net income per common share was $1.05 and $1.03 for the first quarter of 2016 and 2015, respectively.
The Company’s net interest income for the first quarter of 2016 increased to $50.0 million, compared to $45.6 million for the first quarter of 2015. The net interest margin for the quarter was 3.25%, compared to 3.07% a year ago. Internal loan growth, acquired loans from the Company’s October 2015 acquisition and the increase in the Fed Fund rate of 25 basis points during the fourth quarter of 2015 contributed to the higher net interest income and margin in 2016. The Company’s provision for loan losses for the first quarter of 2016 increased to $4.1 million, compared to $1.3 million a year ago. The increase in the provision was primarily due to downgrades of a few commercial loans which were impacted by the economic effects in Oklahoma from low energy prices. Net charge-offs for the quarter were only 0.03% of average loans, compared to 0.01% for the first quarter of 2015. Noninterest income for the quarter totaled $25.6 million, compared to $25.3 million last year. Noninterest expense for the quarter totaled $46.3 million, compared to $44.9 million last year, primarily due to salary increases from raises and the Company’s acquisition in the fourth quarter of 2015. The increase in noninterest expenses was partially offset by gains on the sale of other real estate owned totaling $1.2 million. The Company’s effective tax rate was 34.2% compared to 34.1% for the first quarter of 2015.
At March 31, 2016, the Company’s total assets were $6.7 billion, largely unchanged from December 31, 2015. Securities decreased $55.0 million to a total of $498.0 million due to large maturities during the quarter. Loans totaled $4.3 billion, up slightly from December 31, 2015. Deposits totaled $6.0 billion, marginally above the December 31, 2015 total. The Company’s total stockholders’ equity was $662.7 million, an increase of $7.2 million, or 1.1%, over December 31, 2015.
Asset quality remained strong during the first quarter of 2016. Nonperforming and restructured assets were 0.55% of total assets at March 31, 2016 compared to 0.83% at December 31, 2015. The decrease in nonperforming and restructured assets was largely due to one relationship that was removed from a troubled debt restructuring status due to sustained improvement in financial condition, performance and the commercially reasonable nature of its structure. Also contributing to the decrease in nonperforming assets were sales of other real estate owned. The allowance to total loans was 1.04%, compared to 0.98% at year-end 2015. The allowance to nonperforming and restructured loans was 136.4% compared to 88.5% at year-end 2015.
During the quarter, the Company repurchased 100,000 shares of its common stock at an average price of $55.23 under the Company’s stock repurchase program.
On October 8, 2015, the Company completed the acquisition of CSB Bancshares, Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang, and El Reno, Oklahoma. Bank of Commerce had approximately $196 million in total assets, $148 million in loans, $170 million in deposits, and $22 million in equity capital. The bank was merged into BancFirst during the fourth quarter of 2015.
Oil prices continued to be low during the first quarter of 2016, which had a dampening effect on the Oklahoma economy. Any continued impact from low oil prices on Oklahoma’s economy and the Company’s financial results could 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
Securities transactions
Per Common Share Data
Net income – basic
Net income – diluted
Cash dividends
0.36
0.34
Performance Data
Return on average assets
1.00
1.01
Return on average stockholders’ equity
10.05
10.65
Cash dividend payout ratio
33.73
32.43
Net interest spread
3.09
2.93
Net interest margin
3.25
3.07
Efficiency ratio
61.24
63.34
Net charge-offs to average loans
0.03
0.02
Net Interest Income
For the three months ended March 31, 2016, net interest income, which is the Company’s principal source of operating revenue, increased to $50.0 million compared to $45.6 million for the three months ended March 31, 2015. 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 3.25% compared to 3.07% a year ago. Internal loan growth, acquired loans from the Company’s October 2015 acquisition and the increase in the Fed Fund rate of 25 basis points during the fourth quarter of 2015 contributed to the higher net interest income and margin in 2016. If interest rates and/or loan volume do not increase, management would expect its net interest margin to generally remain at current levels.
Provision for Loan Losses
The Company’s provision for loan loss for the first quarter of 2016 increased to $4.1 million compared to $1.3 million a year ago. The increase in the provision was primarily due to downgrades of a few commercial loans which were impacted by the economic effect in Oklahoma from low energy prices. 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 $1.2 million for the first quarter of 2016, compared to $666,000 for the first quarter of 2015. The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at a very low level.
Noninterest Income
Noninterest income totaled $25.6 million for the first quarter of 2016 compared to $25.3 million for the first quarter of 2015.
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The Company had fees from debit card usage totaling $5.9 million and $5.4 million during the three month periods ended March 31, 2016 and 2015, respectively. This represents 23.1% and 21.5% of the Company’s noninterest income for the three month periods ended March 31, 2016 and 2015, respectively.
Noninterest Expense
For the three months ended March 31, 2016, noninterest expense totaled $46.3 million, compared to $44.9 million for the three months ended March 31, 2015. The increase in noninterest expense for the first quarter of 2016 was primarily due to salary increases from raises and the Company’s acquisition in the fourth quarter of 2015. This was partially offset by gains on sale of other real estate owned totaling $1.2 million.
Income Taxes
The Company’s effective tax rate on income before taxes was 34.2% for the first quarter of 2016, compared to 34.1% for the first quarter of 2015.
FINANCIAL POSITION
Balance Sheet Data
Total loans (net of unearned interest)
4,282,738
4,245,773
Securities
Stockholders' equity
Book value per share
42.68
42.03
Tangible book value per share
38.22
37.56
Average loans to deposits (year-to-date)
71.28
67.34
Average earning assets to total assets (year-to-date)
92.88
93.02
Average stockholders’ equity to average assets (year-to-date)
9.92
9.76
Asset Quality Ratios
Nonperforming and restructured loans to total loans
1.11
Nonperforming and restructured assets to total assets
0.55
0.83
Allowance for loan losses to total loans
1.04
0.98
Allowance for loan losses to nonperforming and restructured loans
136.42
88.50
Cash and Interest-Bearing Deposits with Banks
The aggregate of cash and due from banks and interest-bearing deposits with banks increased $70.1 million, or 4.39% to $1.7 billion, from December 31, 2015 to March 31, 2016. This increase was due to large maturities of securities during the quarter and a marginal increase in deposits.
At March 31, 2016, total securities decreased $55.0 million, or 9.9% compared to December 31, 2015. 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 $3.4 million at March 31, 2016, compared to an unrealized gain of $2.5 million at December 31, 2015. These unrealized gains are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of $2.1 million and $1.5 million, respectively.
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Loans (Including Acquired Loans)
At March 31, 2016, loans totaled $4.3 billion, up slightly from December 31, 2015. The increase in 2016 was primarily driven by an increase in commercial real estate loans located in the Company’s metropolitan markets.
Allowance for Loan Losses/Fair Value Adjustments on Acquired Loans
At March 31, 2016, the allowance for loan losses to total loans represented 1.04% of total loans, compared to 0.98% at December 31, 2015.
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 $3.0 million at March 31, 2016 and $3.3 million at December 31, 2015 while the acquired loans outstanding were $187.7 million and $192.9 million, respectively.
Nonperforming and restructured assets totaled $36.9 million at March 31, 2016, compared to $55.3 million at December 31, 2015. The Company’s level of nonperforming and restructured assets has continued to be relatively low. The decrease in nonperforming and restructured assets in 2016 was due to one relationship that was re-evaluated and removed from restructured loans due to sustained improvement in financial condition, performance and the commercially reasonable nature of its structure.
Nonaccrual loans totaled $31.0 million at March 31, 2016, compared to $30.1 million at the end of 2015. 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 $513,000 for the first quarter of 2016 and $310,000 for the first quarter of 2015. Only a small amount of this interest is expected to be ultimately collected.
Other real estate owned and repossessed assets totaled $4.2 million at March 31, 2016, compared to $8.2 million at December 31, 2015. Other real estate owned and repossessed assets decreased during the quarter primarily due to the sale of two properties.
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 $6.1 million of these loans at March 31, 2016, compared to $4.9 million at December 31, 2015. 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
At March 31, 2016, deposits totaled $6.0 billion, marginally above the December 31, 2015 balance. 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 94.4% at March 31, 2016 compared to 94.3% at December 31, 2015. Noninterest-bearing deposits to total deposits were 40.2% at March 31, 2016, compared to 40.3% at December 31, 2015.
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 $1.3 million at March 31, 2016, compared to $500,000 at December 31, 2015.
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 $656.2 million, are
29
pledged as collateral for the borrowings under the line of credit. As of March 31, 2016 and December 31, 2015, the Company had no advances outstanding under the line of credit from FHLB. In addition, the Company has a revolving line of credit with the ability to draw up to $10.0 million. This line of credit has a variable rate based on prime rate minus 25 basis points and matures in 2020. There were no borrowings against this line of credit at March 31, 2016.
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, 2015.
Capital Resources
Stockholders’ equity totaled $662.7 million at March 31, 2016, compared to $655.5 million at December 31, 2015. In addition to net income of $16.6 million, other changes in stockholders’ equity during the three months ended March 31, 2016 included $693,000 related to stock option exercises, $451,000 related to stock-based compensation and a $530,000 increase in other comprehensive income, that were partially offset by $5.6 million in dividends and $5.5 million in stock repurchases. The Company’s leverage ratio and total risk-based capital ratios at March 31, 2016, 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, 2015.
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
Taxable Equivalent Basis (Dollars in thousands)
Interest
Income/
Yield/
Expense
Rate
Earning assets:
Loans (1)
4,242,883
50,329
4.76
3,840,833
46,051
4.86
Securities – taxable
491,505
1.08
486,430
1.17
Securities – tax exempt
42,539
393
3.71
39,005
378
3.93
Interest-bearing deposits w/ banks & FFS
1,419,500
0.51
1,686,414
0.26
Total earning assets
6,196,427
53,851
3.49
6,052,682
48,890
3.28
Nonearning assets:
179,455
181,937
Interest receivable and other assets
336,841
316,550
(41,591
(40,879
Total nonearning assets
474,705
457,608
6,671,132
6,510,290
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits
792,120
201
0.10
723,908
0.09
Savings deposits
2,078,802
1,691
0.33
2,052,927
1,150
0.23
Time deposits
721,792
1,188
0.66
743,624
1,220
0.67
0.35
3,033
0.14
6.55
26,804
7.43
Total interest-bearing liabilities
3,625,784
0.40
3,550,296
Interest-free funds:
Noninterest-bearing deposits
2,359,783
2,312,217
Interest payable and other liabilities
23,627
28,636
Stockholders’ equity
661,938
619,141
Total interest free funds
3,045,348
2,959,994
Total liabilities and stockholders’ equity
50,248
45,860
Effect of interest free funds
0.16
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, 2015, 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 Internal Auditor, Chief Asset Quality Officer, 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.
32
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 March 31, 2016, 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, 2015.
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 March 31, 2016.
Maximum
Number of Shares
Total Number of
That May Yet Be
Shares Purchased
Purchased Under
Average Price
as Part of Publicly
the Plan at the
Period
Paid Per Share
Announced Plan
End of the Period
January 1, 2016 to January 31, 2016
65,367
55.33
100,909
February 1, 2016 to February 29, 2016
34,633
55.04
March 1, 2016 to March 31, 2016
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
33
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).
4.7
Form of Guarantee Agreement by and between CSB Bancshares, Inc. and Wilmington Trust Company (filed as Exhibit 4.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 and incorporated herein by reference).
4.8
Form of Indenture relating to the Floating Rate Junior Subordinated Deferrable Interest Debentures of CSB Bancshares, Inc., issued to Wilmington Trust Company (filed as Exhibit 4.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 and incorporated herein by reference).
4.9
Form of First Supplemental Indenture relating to the Floating Rate Junior Subordinated Deferrable Interest Debentures by and between Wilmington Trust Company and BancFirst Corporation (filed as Exhibit 4.9 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 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
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).
10.5*
Adoption Agreement for the BancFirst Corporation Thrift Plan adopted April 21, 2016 effective January 1, 2016.
34
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.
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: May 6, 2016
/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)