UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in charter)
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incorporation or organization) |
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Identification No.) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No
As of April 28, 2023 there were
BancFirst Corporation
Quarterly Report on Form 10-Q
March 31, 2023
Table of Contents
Item |
PART I – Financial Information |
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1. |
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2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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3. |
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37 |
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PART II – Other Information |
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1. |
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1A. |
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4. |
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5. |
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6. |
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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March 31, |
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December 31, |
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2023 |
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2022 |
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(unaudited) |
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(see Note 1) |
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ASSETS |
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Cash and due from banks |
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$ |
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$ |
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Interest-bearing deposits with banks |
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Federal funds sold |
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Debt securities held for investment (fair value: $ |
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Debt securities available for sale at fair value |
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Loans held for sale |
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Loans held for investment (net of unearned interest) |
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Allowance for credit losses |
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Loans, net of allowance for credit losses |
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Premises and equipment, net |
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Other real estate owned |
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Intangible assets, net |
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Goodwill |
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Accrued interest receivable and other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Deposits: |
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Noninterest-bearing |
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$ |
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$ |
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Interest-bearing |
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Total deposits |
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Short-term borrowings |
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Accrued interest payable and other liabilities |
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Subordinated debt |
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Total liabilities |
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Stockholders' equity: |
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Senior preferred stock, $ |
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Cumulative preferred stock, $ |
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Common stock, $ |
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Capital surplus |
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Retained earnings |
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Accumulated other comprehensive loss, net of tax benefit of $ |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying Notes are an integral part of these consolidated financial statements.
2
BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share data)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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INTEREST INCOME |
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Loans, including fees |
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$ |
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$ |
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Debt securities: |
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Taxable |
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Tax-exempt |
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Federal funds sold |
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Interest-bearing deposits with banks |
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Total interest income |
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INTEREST EXPENSE |
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Deposits |
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Short-term borrowings |
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Subordinated debt |
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Total interest expense |
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Net interest income |
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Provision for credit losses |
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Net interest income after provision for credit losses |
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NONINTEREST INCOME |
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Trust revenue |
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Service charges on deposits |
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Securities transactions (includes accumulated other comprehensive loss reclassifications of $ |
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( |
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Income from sales of loans |
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Insurance commissions |
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Cash management |
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Gain on sale of other assets |
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Other |
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Total noninterest income |
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NONINTEREST EXPENSE |
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Salaries and employee benefits |
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Occupancy, net |
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Depreciation |
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Amortization of intangible assets |
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Data processing services |
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Net expense from other real estate owned |
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Marketing and business promotion |
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Deposit insurance |
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Other |
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Total noninterest expense |
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Income before taxes |
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Income tax expense |
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Net income |
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$ |
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$ |
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NET INCOME PER COMMON SHARE |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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OTHER COMPREHENSIVE (LOSS)/GAIN |
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Unrealized income/(losses) on debt securities, net of tax (expense)/benefit of $( |
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( |
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Reclassification adjustment for losses included in net income, net of tax expense of $ |
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Other comprehensive income/(loss), net of tax (expense)/benefit of $( |
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Comprehensive income |
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$ |
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$ |
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The accompanying Notes are an integral part of these consolidated financial statements.
3
BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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COMMON STOCK |
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Issued at beginning of period |
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$ |
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$ |
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Shares issued for stock options |
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Issued at end of period |
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$ |
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$ |
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CAPITAL SURPLUS |
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Balance at beginning of period |
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$ |
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$ |
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Common stock issued for stock options |
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Stock-based compensation arrangements |
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Balance at end of period |
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$ |
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$ |
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RETAINED EARNINGS |
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Balance at beginning of period |
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$ |
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$ |
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Net income |
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Dividends on common stock ($ |
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Balance at end of period |
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$ |
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$ |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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Unrealized (losses)/gains on securities: |
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Balance at beginning of period |
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$ |
( |
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$ |
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Net change |
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( |
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Balance at end of period |
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$ |
( |
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$ |
( |
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Total stockholders’ equity |
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$ |
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$ |
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The accompanying Notes are an integral part of these consolidated financial statements.
4
BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ |
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$ |
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Adjustments to reconcile to net cash provided by operating activities: |
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Provision for credit losses |
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Depreciation and amortization |
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Net amortization of securities premiums and discounts |
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Realized securities losses |
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Gain on sales of loans |
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( |
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Cash receipts from the sale of loans originated for sale |
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Cash disbursements for loans originated for sale |
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( |
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( |
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Deferred income tax benefit |
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( |
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( |
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Gain on sale of other assets |
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( |
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( |
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Increase in interest receivable |
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( |
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( |
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Increase in interest payable |
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Amortization of stock-based compensation arrangements |
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Excess tax benefit from stock-based compensation arrangements |
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( |
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( |
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Other, net |
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Net cash provided by operating activities |
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INVESTING ACTIVITIES |
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Net cash received from acquisitions, net of cash paid |
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Net decrease/(increase) in federal funds sold |
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( |
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Purchases of available for sale debt securities |
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( |
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( |
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Proceeds from maturities, calls and paydowns of held for investment debt securities |
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Proceeds from maturities, calls and paydowns of available for sale debt securities |
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Proceeds from sales of available for sale securities |
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— |
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Purchase of equity securities |
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( |
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Proceeds from paydowns and sales of equity securities |
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Net change in loans |
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( |
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( |
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Net receipts/(payments) on derivative asset contracts |
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( |
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Purchases of premises, equipment and computer software |
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( |
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( |
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Purchase of tax credits |
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( |
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( |
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Other, net |
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Net cash used in investing activities |
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( |
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FINANCING ACTIVITIES |
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Net change in deposits |
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( |
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Net change in short-term borrowings |
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Issuance of common stock in connection with stock options, net |
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Cash dividends paid |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Net (decrease)/increase in cash, due from banks and interest-bearing deposits |
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( |
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Cash, due from banks and interest-bearing deposits at the beginning of the period |
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Cash, due from banks and interest-bearing deposits at the end of the period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
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Cash paid during the period for interest |
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$ |
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$ |
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Cash paid during the period for income taxes |
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$ |
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$ |
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Noncash investing and financing activities: |
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Cash consideration for acquisitions |
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$ |
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$ |
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Fair value of assets acquired in acquisitions |
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$ |
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$ |
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Liabilities assumed in acquisitions |
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$ |
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$ |
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Unpaid common stock dividends declared |
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$ |
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$ |
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The accompanying Notes are an integral part of these consolidated financial statements.
5
BANCFIRST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank ("Pegasus"), Worthington Bank ("Worthington") and BancFirst and its subsidiaries ("BancFirst"). The principal operating subsidiaries of BancFirst are BFTower, LLC, BFC-PNC LLC, and BancFirst Agency, Inc. All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.
The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with U.S. GAAP for interim financial information and the instructions for Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). The information contained in the consolidated financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022, 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.
Reclassifications
Certain items in prior consolidated 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 credit losses, income taxes, the fair value of financial instruments and the valuation of assets and liabilities acquired in a business combination, including identifiable intangible assets. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.
Recent Accounting Pronouncements
Standards Adopted During the Current Period:
In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, “Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 eliminated the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, required that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. In addition, the update required that the Company disclose current-period charge-offs by year of origination for financing receivables. The current-period charge-off amendment was applied prospectively. The amendments were effective for annual periods beginning after December 15, 2022, including interim periods within those annual periods. The Company
In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-02, "Investments - Equity Method and Joint Ventures (Topic 323)." ASU 2023-02 permits the election of accounting for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method, if certain conditions are met. Using the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits
6
and other income tax benefits in the income statement as a component of income tax expense (benefit). The amendments are effective for annual periods beginning after December 15, 2023, including interim periods within those annual periods. Early adoption is permitted for all entities in any interim period. The Company
(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
On March 30, 2023, the Company took an advance of $
On February 8, 2022, the Company acquired Worthington for an aggregate cash purchase price of $
(3) SECURITIES
The following table summarizes the amortized cost and estimated fair values of debt securities held for investment:
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Amortized |
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Gross |
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Gross |
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Estimated |
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March 31, 2023 |
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(Dollars in thousands) |
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Mortgage backed securities (1) |
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$ |
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$ |
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$ |
— |
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$ |
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States and political subdivisions |
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— |
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— |
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Other securities |
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— |
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— |
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Total |
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$ |
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$ |
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$ |
— |
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$ |
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December 31, 2022 |
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Mortgage backed securities (1) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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States and political subdivisions |
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— |
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— |
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Other securities |
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— |
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— |
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Total |
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$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
7
The following table summarizes the amortized cost and estimated fair values of debt securities available for sale:
|
|
|
|
|||||||||||||
|
|
Amortized |
|
|
Gross |
|
|
Gross |
|
|
Estimated |
|
||||
March 31, 2023 |
|
(Dollars in thousands) |
|
|||||||||||||
U.S. treasuries |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
U.S. federal agencies |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage backed securities (1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
States and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Asset backed securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Other securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. treasuries |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
U.S. federal agencies |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage backed securities (1) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
States and political subdivisions |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Asset backed securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Other securities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
(1) Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.
On January 10, 2022, the Company purchased United States Treasury Notes of $
The maturities of debt securities held for investment and available for sale are summarized in the following table using contractual maturities. Actual maturities may differ from contractual maturities due to obligations that are called or prepaid. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||
|
|
Amortized |
|
|
Estimated |
|
|
Amortized |
|
|
Estimated |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contractual maturity of debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Within one year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
After one year but within five years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
After five years but within ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
After ten years |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contractual maturity of debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Within one year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
After one year but within five years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
After five years but within ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
After ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total debt securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Book value of pledged securities |
|
$ |
|
|
$ |
|
||
8
The following is a detail of proceeds from sales and the realized losses on available for sale debt securities:
|
|
|
|
|
|
|
||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Proceeds |
|
$ |
— |
|
|
$ |
|
|
Gross losses realized |
|
|
— |
|
|
|
|
|
Realized gains/losses on debt and equity securities are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.
The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at March 31, 2023 and December 31, 2022 respectively:
|
|
|
|
Less than 12 Months |
|
|
More than 12 Months |
|
|
Total |
|
||||||||||||||||
|
Number of investments |
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|
Estimated |
|
|
Unrealized |
|
|||||||
|
|
|
|
(Dollars in thousands) |
|
||||||||||||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. treasuries |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
U.S. federal agencies |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||||
Mortgage backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
States and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Asset backed securities |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
U.S. treasuries |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
U.S. federal agencies |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mortgage backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
States and political subdivisions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Asset backed securities |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||||
Other securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
The Company has the ability and intent to hold the debt securities classified as held for investment until they mature, at which time the Company will receive full value for the debt securities. Furthermore, as of March 31, 2023 and December 31, 2022, the Company also had the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. The Company has no intent or requirement to sell before the recovery of the unrealized loss; therefore, no impairment loss was realized in the Company’s consolidated statement of comprehensive income.
9
(4) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
Certain loan segments were reclassified during the quarter. Each loan segment is made up of loan categories possessing similar risk characteristics. The Company’s re-alignment of the segments primarily consisted of reclassifying farmland and agriculture related loans that were previously included in consumer-related and commercial-related loans to the agriculture category. Management believes this accurately represents the risk profile of each loan segment. The prior period amounts have been revised to conform to the current period presentation. These reclassifications did not have a significant impact on the allowance for credit losses.
Loans held for investment are summarized by portfolio segment as follows:
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
(Dollars in thousands) |
|
|||||
Real estate: |
|
|
|
|
|
||
Commercial real estate owner occupied |
|
|
|
|
|
||
Commercial real estate non-owner occupied |
|
|
|
|
|
||
Construction and development < 60 months |
|
|
|
|
|
||
Construction residential real estate < 60 months |
|
|
|
|
|
||
Residential real estate first lien |
|
|
|
|
|
||
Residential real estate all other |
|
|
|
|
|
||
Agriculture |
|
|
|
|
|
||
Commercial non-real estate |
|
|
|
|
|
||
Consumer non-real estate |
|
|
|
|
|
||
Oil and gas |
|
|
|
|
|
||
Total (1) |
$ |
|
|
$ |
|
||
(1) Excludes accrued interest receivable of $ |
|
||||||
|
|
||||||
The Company's loans are currently
The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
Loan Modifications, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets
The following is a summary of other real estate owned and repossessed assets:
|
|
|
|
|
|
|
||
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Other real estate owned and repossessed assets |
|
$ |
|
|
$ |
|
||
As of both March 31, 2023 and December 31, 2022, other real estate owned included a commercial real estate property recorded at approximately $
This property had the following rental income and operating expenses for the periods presented.
|
|
For the Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Rental income |
|
$ |
|
|
$ |
|
||
Operating expense |
|
|
|
|
|
|
||
10
During the three months ended March 31, 2023, the Company sold property held in other real estate owned for a total gain of $
The Company charges interest on principal balances outstanding on modified loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material.
Nonaccrual loans
The Company did
Nonaccrual loans guaranteed by government agencies totaled approximately $
The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Real estate: |
|
|
|
|
|
|
||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
|
||
Commercial real estate non-owner occupied |
|
|
|
|
|
|
||
Construction and development < 60 months |
|
|
|
|
|
|
||
Construction residential real estate < 60 months |
|
|
|
|
|
|
||
Residential real estate first lien |
|
|
|
|
|
|
||
Residential real estate all other |
|
|
|
|
|
|
||
Agriculture |
|
|
|
|
|
|
||
Commercial non-real estate |
|
|
|
|
|
|
||
Consumer non-real estate |
|
|
|
|
|
|
||
Oil and gas |
|
|
— |
|
|
|
|
|
Total |
|
$ |
|
|
$ |
|
||
11
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of the Company's loans held for investment:
|
|
Age Analysis of Past Due Loans |
|
|||||||||||||||||||||||||
|
|
30-59 |
|
|
60-89 |
|
|
90 Days |
|
|
Total |
|
|
Current |
|
|
Total Loans |
|
|
Accruing |
|
|||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||
As of March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Commercial real estate non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Construction and development < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Construction residential real estate < 60 months |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential real estate first lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Residential real estate all other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Agriculture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consumer non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Oil and gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
As of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Commercial real estate non-owner occupied |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Construction and development < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Construction residential real estate < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||||
Residential real estate first lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Residential real estate all other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Agriculture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consumer non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Oil and gas |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Credit Quality Indicators
The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. 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 and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2022, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.
The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades along with the gross charge-offs by year of origination:
12
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|
Revolving Loans |
|
|
|
|
|||||||||||||||||||||||
(Dollars in thousands) |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Amortized Cost Basis |
|
|
Total |
|
||||||||
As of March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial real estate owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 4 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Grade 5 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total commercial real estate owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||||
Commercial real estate non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Grade 4 |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total commercial real estate non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Construction and development < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||||
Grade 4 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Total construction and development < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Construction residential real estate < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Grade 3 |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Grade 4 |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total construction residential real estate < 60 months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential real estate first lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Grade 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Total residential real estate first lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Residential real estate all other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 4 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total residential real estate all other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Agriculture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Agriculture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Commercial non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 5 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total commercial non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Consumer non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 4 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total consumer non-real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current-period gross charge-offs |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Oil and gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Grade 2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Grade 3 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||||
Total oil and gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total loans held for investment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total current-period gross charge-offs |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
13
Allowance for Credit Losses Methodology
The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the CECL model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.
The following table details activity in the allowance for credit losses on 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.
|
|
Allowance for Credit Losses |
|
|||||||||||||||||||||
|
|
Balance at |
|
|
Charge- |
|
|
Recoveries |
|
|
Net |
|
|
Provision for /(benefit from) credit losses on loans |
|
|
Balance at |
|
||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate non-owner occupied |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|||
Construction and development < 60 months |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Construction residential real estate < 60 months |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Residential real estate first lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential real estate all other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Agriculture |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Commercial non-real estate |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Consumer non-real estate |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Oil and gas |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
Allowance for Credit Losses |
|
|||||||||||||||||||||||||
|
|
Balance at |
|
|
Initial allowance on loans purchased with credit deterioration |
|
|
Charge- |
|
|
Recoveries |
|
|
Net |
|
|
Provision for /(benefit from) credit losses on loans |
|
|
Balance at |
|
|||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate non-owner occupied |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Construction and development < 60 months |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Construction residential real estate < 60 months |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Residential real estate first lien |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Residential real estate all other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Agriculture |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Commercial non-real estate |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Consumer non-real estate |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Oil and gas |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
14
Purchased Credit Deteriorated Loans
The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The Company did not purchase credit-deteriorated loans during the three month period ended March 31, 2023. The credit-deteriorated loans purchased during the three months ended March 31, 2022 were as follows:
|
|
Loans acquired |
|
|
|
|
(Dollars in thousands) |
|
|
For the period ended March 31, 2022 |
|
|
|
|
Purchase price of loans at acquisition |
|
$ |
|
|
Allowance for credit losses at acquisition |
|
|
|
|
Par value of acquired loans at acquisition |
|
$ |
|
|
Collateral Dependent Loans
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the three months ended March 31, 2023 and 2022, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.
|
|
Collateral Type |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Real Estate |
|
|
Business Assets |
|
|
Energy Reserves |
|
|
Other Assets |
|
|
Total |
|
|
Specific Allocation |
|
||||||
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|||||||||||||||
As of March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate non-owner occupied |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Construction and development < 60 months |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Construction residential real estate < 60 months |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Residential real estate first lien |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Residential real estate all other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Agriculture |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Commercial non-real estate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Consumer non-real estate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Oil and gas |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total collateral-dependent loans held for investment |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Collateral Type |
|
|
|
|
|
|
|
|||||||||||||||
|
|
Real Estate |
|
|
Business Assets |
|
|
Energy Reserves |
|
|
Other Assets |
|
|
Total |
|
|
Specific Allocation |
|
||||||
|
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|||||||||||||||
As of December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial real estate owner occupied |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate non-owner occupied |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Construction and development < 60 months |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Construction residential real estate < 60 months |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Residential real estate first lien |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Residential real estate all other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Agriculture |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Commercial non-real estate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Consumer non-real estate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Oil and gas |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total collateral-dependent loans held for investment |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
15
Non-Cash Transfers from Loans and Premises and Equipment
Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the consolidated statements of cash flow.
Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Other real estate owned |
|
$ |
|
|
$ |
|
||
Repossessed assets |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
(5) INTANGIBLE ASSETS AND GOODWILL
The following is a summary of intangible assets as of the date listed:
|
|
Gross |
|
|
Accumulated |
|
|
Net |
|
|||
|
|
(Dollars in thousands) |
|
|||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Core deposit intangibles |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Customer relationship intangibles |
|
|
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
Core deposit intangibles |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Customer relationship intangibles |
|
|
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The following is a summary of goodwill by business segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
BancFirst Metropolitan Banks |
|
|
BancFirst Community Banks |
|
|
Pegasus |
|
|
Worthington |
|
|
Other Financial Services |
|
|
Executive, Operations & Support |
|
|
Consolidated |
|
|||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||
Three months ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Balance at beginning and end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
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, 2022.
(6) SUBORDINATED DEBT
In January 2004, the Company established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. The Company owns all of the common securities of BFC II. In February 2004, BFC II issued $
16
represent an undivided interest in the $
On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $
The Company may, at its option, beginning with the interest payment date of June 30, 2031, and on any scheduled interest payment date thereafter, redeem the Subordinated Notes, in whole or in part. In addition,
(7) STOCK-BASED COMPENSATION
The Company has had a nonqualified incentive stock option plan, the BancFirst Corporation Stock Option Plan (the “Employee Plan”), since May 1986. At March 31, 2023, there were
The Company has had the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “Non-Employee Directors’ Plan”) since June 1999. Each non-employee director is granted an option for
The Company currently uses newly issued shares for stock option exercises, but reserves the right to use shares purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future.
Although not required or expected, the Company may settle some options in cash on a limited basis at the discretion of the Company. The Company had
The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’ Plan:
|
|
|
|
|
|
|
|
Wgtd. Avg. |
|
|
|
|||
|
|
|
|
|
Wgtd. Avg. |
|
|
Remaining |
|
Aggregate |
|
|||
|
|
|
|
|
Exercise |
|
|
Contractual |
|
Intrinsic |
|
|||
|
|
Options |
|
|
Price |
|
|
Term |
|
Value |
|
|||
|
|
(Dollars in thousands, except option data) |
|
|||||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|||
Outstanding at December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
|||
Options exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Options canceled, forfeited, or expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
||
Outstanding at March 31, 2023 |
|
|
|
|
|
|
|
|
$ |
|
||||
Exercisable at March 31, 2023 |
|
|
|
|
|
|
|
|
$ |
|
||||
17
The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’ Plan:
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Total intrinsic value of options exercised |
|
$ |
|
|
$ |
|
||
Cash received from options exercised |
|
|
|
|
|
|
||
Tax benefit realized from options exercised |
|
|
|
|
|
|
||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each option is expensed over its vesting period.
The following table is a summary of the Company’s recorded stock-based compensation expense:
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Stock-based compensation expense |
|
$ |
|
|
$ |
|
||
Tax benefit |
|
|
|
|
|
|
||
Stock-based compensation expense, net of tax |
|
$ |
|
|
$ |
|
||
The Company will continue to amortize the unearned stock-based compensation expense over the remaining vesting period of approximately
|
|
March 31, 2023 |
|
|
|
|
(Dollars in thousands) |
|
|
Unearned stock-based compensation expense |
|
$ |
|
|
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Weighted average grant-date fair value per share of options granted |
|
$ |
— |
|
|
$ |
|
|
Risk-free interest rate |
|
|
— |
|
|
|
||
Dividend yield |
|
|
— |
|
|
|
||
Stock price volatility |
|
|
— |
|
|
|
||
Expected term |
|
|
— |
|
|
|
||
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. The Company accounts for forfeitures as they occur.
The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999. As of March 31, 2023, there are
18
stock units accumulated in his or her account. There were
A summary of the accumulated stock units is as follows:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Accumulated stock units |
|
|
|
|
|
|
||
Average price |
|
$ |
|
|
$ |
|
||
(8) STOCKHOLDERS’ EQUITY
In November 1999, the Company adopted the SRP. The SRP may be used as a means to increase earnings per share and return on equity. In addition, the SRP may be used 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.
The following table is a summary of the shares under the program:
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Shares remaining to be repurchased |
|
|
|
|
|
|
||
19
|
|
|
|
|
|
|
Required |
|
|
|
To Be Well |
|||||||||||||
|
|
|
|
|
|
|
For Capital |
|
With |
|
Capitalized Under |
|||||||||||||
|
|
|
|
|
|
|
Adequacy |
|
Capital Conservation |
|
Prompt Corrective |
|||||||||||||
|
|
Actual |
|
Purposes |
|
Buffer |
|
Action Provisions |
||||||||||||||||
|
|
Amount |
|
|
Ratio |
|
Amount |
|
|
Ratio |
|
Amount |
|
|
Ratio |
|
Amount |
|
|
Ratio |
||||
|
|
(Dollars in thousands) |
||||||||||||||||||||||
As of March 31, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BancFirst Corporation |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
N/A |
|
|
N/A |
|||||||
BancFirst |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||||||
Pegasus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Worthington |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common Equity Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BancFirst Corporation |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
N/A |
|
|
N/A |
|||||||
BancFirst |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||||||
Pegasus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Worthington |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BancFirst Corporation |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
N/A |
|
|
N/A |
|||||||
BancFirst |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
||||||||
Pegasus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Worthington |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(to Total Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
BancFirst Corporation |
|
$ |
|
|
|
$ |
|
|
|
N/A |
|
|
N/A |
|
N/A |
|
|
N/A |
||||||
BancFirst |
|
|
|
|
|
|
|
|
|
N/A |
|
|
N/A |
|
$ |
|
|
|||||||
Pegasus |
|
|
|
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
|
|
|||||||
Worthington |
|
|
|
|
|
|
|
|
|
N/A |
|
|
N/A |
|
|
|
|
|||||||
As of March 31, 2023, the most recent notifications from the Federal Reserve Bank of Kansas City, the FDIC and the Comptroller of the Currency, categorized BancFirst, Pegasus and Worthington as “well capitalized” under the prompt corrective action provisions. The Common Equity Tier 1 Capital of BancFirst Corporation, BancFirst, Pegasus and Worthington includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, the election was made to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1 Capital. Common Equity Tier 1 Capital for BancFirst Corporation, BancFirst, Pegasus and Worthington is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. The Company’s trust preferred securities have continued to be included in Tier 1 capital, as the Company’s total assets do not exceed $
On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $
20
(9) NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are calculated as follows:
|
|
Income |
|
|
Shares |
|
|
Per Share |
|
|||
|
|
(Dollars in thousands, except per share data) |
|
|||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|||
Income available to common stockholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Dilutive effect of stock options |
|
|
— |
|
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
|
|
|
|||
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
|
|
|
|
|
$ |
|
|||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|||
Income available to common stockholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Dilutive effect of stock options |
|
|
— |
|
|
|
|
|
|
|
||
Diluted |
|
|
|
|
|
|
|
|
|
|||
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
|
|
|
|
|
$ |
|
|||
The following table shows the number of options that were excluded from the computation of diluted net income per common share for each period because the options were anti-dilutive for the period:
|
|
Shares |
|
|
Three Months Ended March 31, 2023 |
|
|
|
|
Three Months Ended March 31, 2022 |
|
|
|
|
(10) 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 Accounting Standards Codification (“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:
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.
21
Debt Securities Available for Sale
Debt securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other debt securities available for sale including U.S. federal agencies, registered mortgage backed debt 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 debt securities for which observable information is not readily available. These debt securities are reported at fair value utilizing Level 3 inputs. For these debt securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors. Discount rates are primarily based on reference to interest rate spreads on comparable debt securities of similar duration and credit rating as determined by the nationally recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar debt securities.
The Company reviews the prices for Level 1 and Level 2 debt 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 debt securities that are esoteric or that have complicated structures. The Company’s portfolio primarily consists of traditional investments including U.S. Treasury obligations, federal agency mortgage pass-through debt 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. Periodically, the Company will validate 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.
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 |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. federal agencies |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Mortgage-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
States and political subdivisions |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Asset backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Other debt securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. federal agencies |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Mortgage-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
States and political subdivisions |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Asset backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Other debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
22
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:
|
|
Three Months Ended March 31, |
|
|
Twelve Months Ended |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Balance at the beginning of the year |
|
$ |
|
|
$ |
|
||
Transfers to level 2 |
|
|
— |
|
|
|
— |
|
Purchases |
|
|
— |
|
|
|
|
|
Settlements |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Balance at the end of the period |
|
$ |
|
|
$ |
|
||
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, 2023, the Company did not transfer any debt securities. In addition, during the year ended December 31, 2022, the Company did not transfer any debt securities.
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.
The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income.
Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. When the Company determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. In no case does the fair value of a collateral dependent loan exceed the fair value of the underlying collateral. The collateral dependent loans are adjusted to fair value through a specific allocation of the allowance for credit losses or a direct charge-down of the loan.
Repossessed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible credit losses based upon the fair value of the repossessed 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 during the period presented. These nonrecurring fair values do not represent all assets, only those assets that have been adjusted during the reporting period:
|
|
Total Fair Value |
|
|
|
|
Level 3 |
|
|
|
|
(Dollars in thousands) |
|
|
As of and for the Year-to-date Period Ended March 31, 2023 |
|
|
|
|
Equity securities |
|
$ |
|
|
Collateral dependent loans |
|
|
|
|
Repossessed assets |
|
|
|
|
Other real estate owned |
|
|
|
|
As of and for the Year-to-date Period Ended December 31, 2022 |
|
|
|
|
Equity securities |
|
$ |
|
|
Collateral dependent loans |
|
|
|
|
Repossessed assets |
|
|
|
|
Other real estate owned |
|
|
|
|
23
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 and Interest-Bearing Deposits with Banks
The carrying amount of these short-term instruments is based on a reasonable estimate of fair value.
Federal Funds Sold
The carrying amount of these short-term instruments is a reasonable estimate of fair value.
Debt Securities Held for Investment
For debt 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 debt securities making adjustments for credit or liquidity if applicable.
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
Loans Held For Investment
To determine the fair value of loans held for investment, the Company uses an exit price calculation, which takes into account factors such as liquidity, credit and the nonperformance risk of loans. For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair values of other types of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Deposits
The fair values of transaction and savings accounts are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using the rates currently offered for deposits of similar remaining maturities.
Short-Term Borrowings
The amounts payable on these short-term instruments are reasonable estimates of fair value.
Subordinated Debt
The fair values of subordinated debt are estimated using the rates that would be charged for subordinated debt 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.
24
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:
|
|
March 31, |
|
|
December 31, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||
|
|
Carrying |
|
|
Fair Value |
|
|
Carrying |
|
|
Fair Value |
|
||||
|
|
(Dollars in thousands) |
|
|||||||||||||
FINANCIAL ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 2 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Federal funds sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities held for investment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans held for sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 3 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt securities held for investment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans, net of allowance for credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Level 2 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short-term borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subordinated debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loan commitments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Letters of credit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-financial Assets and Non-financial Liabilities Measured at Fair Value
The Company has
25
(11) 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, to mitigate the exposure to fluctuations in oil and gas prices, the Company simultaneously enters into an offsetting contract with a counterparty. These derivatives are not designated as hedged instruments and are recorded on the Company's consolidated balance sheet at fair value and are included in other assets. The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices. At March 31, 2023, the Company had a margin liability included in other liabilities in the amount of $
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:
|
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||
Oil and Natural Gas Swaps and Options |
|
Notional Units |
|
Notional |
|
|
Estimated |
|
|
Notional |
|
|
Estimated |
|
||||
|
|
|
|
(Notional amounts and dollars in thousands) |
|
|||||||||||||
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative assets |
|
Barrels |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Derivative liabilities |
|
Barrels |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gas/Natural Gas Liquids |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative assets |
|
MMBTUs/Gallons |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities |
|
MMBTUs/Gallons |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Fair Value |
|
Included in |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other assets |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Other liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
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, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
|
$ |
|
|
$ |
|
|||
The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by the market price movements. The Company's share of total profit is approximately
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:
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Credit exposure |
|
$ |
— |
|
|
$ |
|
|
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
26
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.
(12) 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
The results of operations and selected financial information for the six business units are as follows:
|
|
BancFirst Metropolitan |
|
|
BancFirst Community |
|
|
Pegasus |
|
|
Worthington |
|
|
Other |
|
|
Executive, |
|
|
Eliminations |
|
|
Consolidated |
|
||||||||
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||||
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||||
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
Income before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||||
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.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition as of March 31, 2023 and December 31, 2022 and results of operations for the three months ended March 31, 2023 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2022, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the 2022 Form 10-K, and "Item 1A, Risk Factors" in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis.
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:
28
Actual results may differ materially from forward-looking statements.
SUMMARY
The Company’s net income for the first quarter of 2023 was $57.5 million, compared to $35.9 million for the first quarter of 2022. Diluted net income per common share was $1.72 and $1.08 for the first quarter of 2023 and 2022, respectively. The Company’s net interest income for the first quarter of 2023 increased to $109.2 million, compared to $75.5 million for the first quarter of 2022. Rising short-term interest rates and loan growth drove the increase. The net interest margin for the first quarter was 3.89%, compared to 2.78% a year ago. For the first quarter of 2023, the Company recorded a provision for credit losses of $2.3 million, compared to a provision for credit losses of $2.9 million for the first quarter of 2022.
Noninterest income for the first quarter of 2023 totaled $47.8 million, compared to $43.7 million for the first quarter of 2022. The increase in noninterest income was mostly attributable to an increase in sweep account fees due to rising interest rates and higher volume, along with a $1.3 million increase in insurance commissions. Noninterest income for the first quarter of 2023 included $327,000 of income from an equity interest received from a prior loan settlement compared to $4.9 million of income from the same source in the first quarter of 2022. In addition, the first quarter of 2022 included a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
Noninterest expense for the first quarter of 2023 increased to $80.3 million compared to $72.5 million for the first quarter of 2022. The increase in noninterest expense was primarily related to an increase in salaries and employee benefits of approximately $5.3 million. The first quarter of 2022 included a gain on sale of OREO which reduced noninterest expense by $726,000. The Company’s effective tax rate was 22.6% for the first quarter of 2023 compared to 17.8% for the first quarter of 2022. During the quarter, the Company adopted Accounting Standard Update ("ASU") 2023-02 and amortized $977,000 of New Market Tax Credits ("NMTC") to income tax expense during the period that would have previously been recorded to other expense. Exercises of stock options and a lower state tax rate contributed to the lower effective tax rate in 2022.
At March 31, 2023, the Company’s total assets were $12.3 billion, a decrease of $55.8 million from December 31, 2022. Debt securities of $1.6 billion were up $77.6 million from December 31, 2022. Loans totaled $7.1 billion, an increase of $175.0 million from December 31, 2022. Deposits totaled $10.6 billion, a decrease of $364.1 million from December 31, 2022 as demand deposits moved into the Company's off balance sheet sweep product. Sweep accounts totaled $4.1 billion at March 31, 2023 up $394.9 million from December 31, 2022. The Company’s total stockholders’ equity at March 31, 2023 was $1.3 billion, an increase of $60.0 million over December 31, 2022.
At March 31, 2023, the Company’s nonaccrual loans were $17.6 million compared to $15.3 million at year-end 2022. Nonaccrual loans represented 0.25% of total loans at March 31, 2023, compared to 0.22% at December 31, 2022. The allowance for credit losses to total loans was 1.33% at both March 31, 2023 and December 31, 2022. Net charge-offs were minimal for both the first quarter of 2023 and 2022.
See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note (1) of the Notes to the Consolidated Financial Statements for disclosures regarding recently issued accounting pronouncements since December 31, 2022, the date of its most recent annual report to stockholders.
SEGMENT INFORMATION
See Note (12) of the Notes to the Consolidated Financial Statements for disclosures regarding business segments.
RESULTS OF OPERATIONS
Average Balances, Income, Expenses and Rates
The following table presents, for the periods indicated, certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan
29
balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were $5.6 million for the three months ended March 31, 2023 compared to $7.3 million for the three months ended March 31, 2022.
BANCFIRST CORPORATION |
|
|||||||||||||||||||||||
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS |
|
|||||||||||||||||||||||
(Unaudited) |
|
|||||||||||||||||||||||
Taxable Equivalent Basis |
|
|||||||||||||||||||||||
(Dollars in thousands) |
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
||||||||||||||||||
|
|
|
|
|
Interest |
|
|
Average |
|
|
|
|
|
Interest |
|
|
Average |
|
||||||
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
||||||
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans (1) |
|
$ |
7,005,731 |
|
|
$ |
104,481 |
|
|
|
6.05 |
% |
|
$ |
6,359,795 |
|
|
$ |
73,066 |
|
|
|
4.66 |
% |
Debt securities – taxable |
|
|
1,572,278 |
|
|
|
8,991 |
|
|
|
2.32 |
|
|
|
1,105,222 |
|
|
|
3,781 |
|
|
|
1.39 |
|
Debt securities – tax exempt |
|
|
3,481 |
|
|
|
9 |
|
|
|
1.07 |
|
|
|
4,774 |
|
|
|
34 |
|
|
|
2.93 |
|
Federal funds sold and interest-bearing deposits with banks |
|
|
2,799,540 |
|
|
|
32,052 |
|
|
|
4.64 |
|
|
|
3,548,875 |
|
|
|
1,758 |
|
|
|
0.20 |
|
Total earning assets |
|
|
11,381,030 |
|
|
|
145,533 |
|
|
|
5.19 |
|
|
|
11,018,666 |
|
|
|
78,639 |
|
|
|
2.89 |
|
Nonearning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and due from banks |
|
|
218,164 |
|
|
|
|
|
|
|
|
|
269,015 |
|
|
|
|
|
|
|
||||
Interest receivable and other assets |
|
|
795,316 |
|
|
|
|
|
|
|
|
|
785,248 |
|
|
|
|
|
|
|
||||
Allowance for credit losses |
|
|
(93,316 |
) |
|
|
|
|
|
|
|
|
(85,228 |
) |
|
|
|
|
|
|
||||
Total nonearning assets |
|
|
920,164 |
|
|
|
|
|
|
|
|
|
969,035 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
12,301,194 |
|
|
|
|
|
|
|
|
$ |
11,987,701 |
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transaction deposits |
|
$ |
927,265 |
|
|
$ |
1,632 |
|
|
|
0.71 |
% |
|
$ |
942,178 |
|
|
$ |
191 |
|
|
|
0.08 |
% |
Savings deposits |
|
|
4,424,063 |
|
|
|
30,491 |
|
|
|
2.80 |
|
|
|
4,170,503 |
|
|
|
1,141 |
|
|
|
0.11 |
|
Time deposits |
|
|
705,787 |
|
|
|
3,054 |
|
|
|
1.76 |
|
|
|
654,091 |
|
|
|
649 |
|
|
|
0.40 |
|
Short-term borrowings |
|
|
6,844 |
|
|
|
83 |
|
|
|
4.94 |
|
|
|
2,459 |
|
|
|
1 |
|
|
|
0.12 |
|
Subordinated debt |
|
|
86,049 |
|
|
|
1,030 |
|
|
|
4.86 |
|
|
|
85,992 |
|
|
|
1,030 |
|
|
|
4.86 |
|
Total interest-bearing liabilities |
|
|
6,150,008 |
|
|
|
36,290 |
|
|
|
2.39 |
|
|
|
5,855,223 |
|
|
|
3,012 |
|
|
|
0.21 |
|
Interest-free funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest-bearing deposits |
|
|
4,797,014 |
|
|
|
|
|
|
|
|
|
4,883,050 |
|
|
|
|
|
|
|
||||
Interest payable and other liabilities |
|
|
79,735 |
|
|
|
|
|
|
|
|
|
67,688 |
|
|
|
|
|
|
|
||||
Stockholders’ equity |
|
|
1,274,437 |
|
|
|
|
|
|
|
|
|
1,181,740 |
|
|
|
|
|
|
|
||||
Total interest free funds |
|
|
6,151,186 |
|
|
|
|
|
|
|
|
|
6,132,478 |
|
|
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
|
$ |
12,301,194 |
|
|
|
|
|
|
|
|
$ |
11,987,701 |
|
|
|
|
|
|
|
||||
Net interest income |
|
|
|
|
$ |
109,243 |
|
|
|
|
|
|
|
|
$ |
75,627 |
|
|
|
|
||||
Net interest spread |
|
|
|
|
|
|
|
|
2.80 |
% |
|
|
|
|
|
|
|
|
2.68 |
% |
||||
Effect of interest free funds |
|
|
|
|
|
|
|
|
1.09 |
% |
|
|
|
|
|
|
|
|
0.10 |
% |
||||
Net interest margin |
|
|
|
|
|
|
|
|
3.89 |
% |
|
|
|
|
|
|
|
|
2.78 |
% |
||||
30
Selected income statement data and other selected data for the comparable periods were as follows:
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Income Statement Data |
|
|
|
|
|
|
||
Net interest income |
|
$ |
109,156 |
|
|
$ |
75,507 |
|
Provision for credit losses |
|
|
2,322 |
|
|
|
2,936 |
|
Securities transactions |
|
|
(213 |
) |
|
|
(3,915 |
) |
Total noninterest income |
|
|
47,828 |
|
|
|
43,650 |
|
Salaries and employee benefits |
|
|
49,252 |
|
|
|
43,932 |
|
Total noninterest expense |
|
|
80,317 |
|
|
|
72,512 |
|
Net income |
|
|
57,533 |
|
|
|
35,915 |
|
Per Common Share Data |
|
|
|
|
|
|
||
Net income – basic |
|
$ |
1.75 |
|
|
$ |
1.10 |
|
Net income – diluted |
|
|
1.72 |
|
|
|
1.08 |
|
Cash dividends |
|
|
0.40 |
|
|
|
0.36 |
|
Performance Data |
|
|
|
|
|
|
||
Return on average assets |
|
|
1.90 |
% |
|
|
1.22 |
% |
Return on average stockholders’ equity |
|
|
18.31 |
|
|
|
12.33 |
|
Cash dividend payout ratio |
|
|
22.86 |
|
|
|
32.73 |
|
Net interest spread |
|
|
2.80 |
|
|
|
2.68 |
|
Net interest margin |
|
|
3.89 |
|
|
|
2.78 |
|
Efficiency ratio |
|
|
51.16 |
|
|
|
60.85 |
|
Net charge-offs to average loans |
|
|
0.00 |
|
|
|
0.00 |
|
Net Interest Income
For the three months ended March 31, 2023, net interest income, which is the Company’s principal source of operating revenue, increased $33.6 million or 44.6% compared to the three months ended March 31, 2022. The increase was due to rising short-term interest rates and loan growth. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. As shown in the preceding table, the Company’s net interest margin for the first quarter of 2023 increased compared to the first quarter of 2022.
During 2022, the Federal Reserve began raising interest rates to help slow inflation in the economy. The Company’s net interest income and net interest margin were impacted by the increases in interest rates. Our expectation is that interest rates will continue to increase in the near term.
Provision for Credit Losses
The provision for credit losses is presented in the preceding table. The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change, which could affect the amount of future provisions for credit losses. Net loan charge-offs were $290,000 for the first quarter of 2023, compared to net loan recoveries of $289,000 for the first quarter of 2022. The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at a low level.
Noninterest Income
Noninterest income, as presented in the preceding table, increased by $4.2 million for the first quarter of 2023 compared to the first quarter of 2022. The increase in noninterest income was mostly attributable to an increase in sweep account fees due to rising interest rates and higher volume, along with a $1.3 million increase in insurance commissions. Noninterest income for the first quarter of 2023 included $327,000 of income from an equity interest received from a prior loan settlement compared to $4.9 million of income
31
from the same source in the first quarter of 2022. In addition, the first quarter of 2022 included a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $6.4 million and $6.5 million for the three months ended March 31, 2023 and 2022, respectively. This represents 13.5% and 15.0% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card interchange fees totaling $12.0 million and $11.7 million during the three months ended March 31, 2023 and 2022, respectively. This represents 25.2% and 26.7% of the Company’s noninterest income for the respective periods.
The Company is subject to political pressures that could limit our ability to charge for NSF and overdraft fees. As of April 1, 2022, the Company lowered the rates charged on NSF and overdraft fees. The Company exceeded $10 billion in total assets at December 31, 2022. Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this will cause a reduction of annual pretax income from debit card interchange fees of approximately $22 million beginning July 1, 2023.
Noninterest Expense
Noninterest expense, as presented in the preceding table, increased by $7.8 million for first quarter of 2023 compared to the first quarter of 2022. The increase in noninterest expenses was primarily related to an increase in salaries and employee benefits of $5.3 million. The first quarter of 2022 included a gain on sale of OREO which reduced noninterest expense by $726,000.
Income Taxes
The Company’s effective tax rate was 22.6% for the first quarter of 2023, compared to 17.8% for the first quarter of 2022. During the quarter, the Company adopted ASU 2023-02 and amortized $977,000 of NMTC to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 1.31%. Exercises of stock options and a lower state tax rate contributed to the lower effective tax rate in 2022. The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.
32
FINANCIAL POSITION
BANCFIRST CORPORATION |
|
|||||||
SELECTED CONSOLIDATED FINANCIAL DATA |
|
|||||||
(Dollars in thousands, except per share data) |
|
|||||||
|
|
|
|
|
|
|
||
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
|
|
(unaudited) |
|
|
|
|
||
Balance Sheet Data |
|
|
|
|
|
|
||
Total assets |
|
$ |
12,332,105 |
|
|
$ |
12,387,863 |
|
Total loans (net of unearned interest) |
|
|
7,124,831 |
|
|
|
6,949,795 |
|
Allowance for credit losses |
|
|
94,760 |
|
|
|
92,728 |
|
Debt securities |
|
|
1,618,233 |
|
|
|
1,540,604 |
|
Deposits |
|
|
10,610,103 |
|
|
|
10,974,228 |
|
Stockholders' equity |
|
|
1,310,882 |
|
|
|
1,250,836 |
|
Book value per share |
|
|
39.85 |
|
|
|
38.05 |
|
Tangible book value per share (non-GAAP)(1) |
|
|
33.73 |
|
|
|
31.90 |
|
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) |
|
|
|
|
||||
Stockholders' equity |
|
$ |
1,310,882 |
|
|
$ |
1,250,836 |
|
Less goodwill |
|
|
182,055 |
|
|
|
182,055 |
|
Less intangible assets, net |
|
|
19,103 |
|
|
|
19,983 |
|
Tangible stockholders' equity (non-GAAP) |
|
$ |
1,109,724 |
|
|
$ |
1,048,798 |
|
Common shares outstanding |
|
|
32,899,493 |
|
|
|
32,875,560 |
|
Tangible book value per share (non-GAAP) |
|
$ |
33.73 |
|
|
$ |
31.90 |
|
Selected Financial Ratios |
|
|
|
|
|
|
||
Balance Sheet Ratios: |
|
|
|
|
|
|
||
Average loans to deposits (year-to-date) |
|
|
64.54 |
% |
|
|
60.06 |
% |
Average earning assets to total assets (year-to-date) |
|
|
92.52 |
|
|
|
91.63 |
|
Average stockholders’ equity to average assets (year-to-date) |
|
|
10.36 |
|
|
|
9.67 |
|
Asset Quality Data |
|
|
|
|
|
|
||
Loans past due 90 days and still accruing |
|
$ |
7,258 |
|
|
$ |
7,085 |
|
Nonaccrual loans (3) |
|
|
17,649 |
|
|
|
15,299 |
|
Other real estate owned and repossessed assets |
|
|
38,874 |
|
|
|
36,936 |
|
Asset Quality Ratios: |
|
|
|
|
|
|
||
Nonaccrual loans to total loans |
|
|
0.25 |
% |
|
|
0.22 |
% |
Allowance for credit losses to total loans |
|
|
1.33 |
|
|
|
1.33 |
|
Allowance for credit losses to nonaccrual loans |
|
|
536.93 |
|
|
|
606.10 |
|
(1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table. |
|
|||||||
(2) Tangible book value per common share is stockholders’ equity less goodwill and intangible assets, net, divided by common shares outstanding. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of the Company. This measure should not be considered a substitute for operating results determined in accordance with GAAP. |
|
|||||||
(3) Government agencies guarantee approximately $6.4 million of nonaccrual loans at March 31, 2023. |
|
|||||||
Cash and Due from Banks, Federal Funds Sold and Interest-Bearing Deposits with Banks
The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks decreased by $334.3 million or 10.5% to $2.8 billion, from December 31, 2022 to March 31, 2023. The decrease was related to demand deposits that were moved into the Company's off-balance sheet sweep product. Sweep accounts were $4.1 billion at March 31, 2023, up $394.9 million from December 31, 2022.
Securities
At March 31, 2023, total debt securities increased $77.6 million, or 5.0% compared to December 31, 2022. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized loss on debt securities available for sale, before taxes, was $74.5 million at March 31, 2023, compared to a net unrealized loss of $93.7 million at December 31, 2022. These unrealized losses are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of a loss of $56.9 million at March 31, 2023 and a loss of $71.6 million at December 31, 2022. During the quarter ended March 31, 2023, the Company purchased debt securities as shown in the consolidated statements of cash flow. The Company did not have any sales of debt securities during the quarter ended March 31, 2023. During the quarter ended March 31, 2022, the Company had a loss of $4.0 million on bonds resulting from the sale of $226 million of debt securities with an average yield of 0.16%, the proceeds of which were subsequently reinvested in $220 million of debt securities with an average yield of 1.86%.
33
On January 10, 2022, the Company purchased United States Treasury Notes of $600 million par value with an average yield of 1.42% and an average maturity of 53 months.
See Note (3) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities.
Loans
At March 31, 2023, total loans increased $175.0 million or 2.5% compared to December 31, 2022, as a result of internal loan growth. The increase of internal loan growth was 62% from the Company's Oklahoma subsidiary BancFirst and 38% from the Company's Texas subsidiaries Pegasus and Worthington.
See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s loan portfolio segments.
Allowance for Credit Losses
The allowance for credit losses to total loans was 1.33% at both March 31, 2023 and December 31, 2022. The overall credit quality of the Company's loan portfolio has remained strong. If unforeseen adverse changes occur in the national or local economy, or in the credit markets, it would be reasonable to expect that the allowance for credit losses would increase in future periods.
Nonaccrual Loans
Nonaccrual loans totaled $17.6 million at March 31, 2023, compared to $15.3 million at December 31, 2022. The Company’s nonaccrual loans are primarily commercial real estate and commercial non-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 both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $358,000 for the three months ended March 31, 2023 and $376,000 for the three months ended March 31, 2022. Only a small amount of this interest is expected to be ultimately collected. Approximately $6.4 million of nonaccrual loans were guaranteed by government agencies at March 31, 2023.
The classification of a loan as nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although, in an economic downturn, the Company’s experience has been that the level of collections declines. The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses. The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions. The allowance for credit losses as a percentage of nonaccrual loans is shown in the table above.
Modified Loans
As of January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2022-02, which eliminates the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, requires that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material.
Other Real Estate Owned and Repossessed Assets
Other real estate owned (OREO) and repossessed assets totaled $38.9 million at March 31, 2023, compared to $36.9 million at December 31, 2022. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense.
OREO included a commercial real estate property recorded at $30.1 million at March 31, 2023 and $29.4 million at December 31, 2022. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income.
34
This property had the following rental income and operating expenses for the periods presented.
|
|
For the Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
(Dollars in thousands) |
|
|||||
Rental income |
|
$ |
2,690 |
|
|
$ |
2,670 |
|
Operating expense |
|
|
2,381 |
|
|
|
2,439 |
|
The Company's total rental income from OREO was approximately $2.8 million for the three months ended March 31, 2023 and for the three months ended March 31, 2022. In addition, the Company's total OREO holding expense was approximately $2.6 million for the three months ended March 31, 2023 compared to approximately $2.5 million for the three months ended March 31, 2022.
Intangible Assets, Goodwill and Other Assets
Identifiable intangible assets and goodwill totaled $201.2 million and $202.0 million at March 31, 2023 and December 31, 2022, respectively.
Other assets includes the cash surrender value of key-man life insurance policies totaling $83.3 million at March 31, 2023 and $82.7 million at December 31, 2022.
Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $26.0 million at March 31, 2023 and $20.7 million at December 31, 2022. These derivative financial instruments have increased due to the increase in oil and gas prices and customer activity. They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity. At March 31, 2023, the Company had a margin liability included in other liabilities in the amount of $4.6 million. At December 31, 2022, the Company had a margin asset included in other assets in the amount of $6.6 million. See Note (11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.
Equity securities are reported in other assets on the consolidated balance sheet. The Company invests in equity securities without readily determinable fair values. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $15.0 million at March 31, 2023 and $15.5 million at December 31, 2022. The Company reviews its portfolio of equity securities for impairment at least quarterly.
The balance of other assets included equity interests of previous borrowers in the oil and gas industry that were received through bankruptcy proceedings, which totaled $20.3 million at March 31, 2023 and $21.4 million at December 31, 2022. Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded at cost but is adjusted periodically to record as income the bank’s proportionate share of the investee’s earnings or losses and decreased by the amount of cash dividends or similar distributions received from the investee.
Low Income Housing and New Market Tax Credit Investments
During 2023, there have not been any material changes in the Company’s low income housing tax credit ("LIHTC") investments and NMTC investments, which are included in other assets on the Company’s consolidated balance sheet. During the quarter the Company adopted ASU 2023-02 and recorded $21.8 million in other assets and other liabilities on the consolidated balance sheet for unfunded LIHTC commitments and amortized $977,000 of NMTC investments to income tax expense during the period that would have previously been recorded to other expense. See Note (6) of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for disclosures regarding these investments.
Liquidity and Funding
The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. The Company is highly liquid with 23% of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets.
35
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, 2022.
Deposits
At March 31, 2023, deposits totaled $10.6 billion, a decrease of $364.1 million from December 31, 2022 as demand deposits moved into the Company's off balance sheet sweep product. 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 97.8% at March 31, 2023 and 98.1% at December 31, 2022. Noninterest-bearing deposits to total deposits were 42.8% at March 31, 2023, compared to 45.1% at December 31, 2022.
Off-balance sheet sweep accounts totaled $4.1 billion at March 31, 2023 compared to $3.7 billion at December 31, 2022. The Company's sweep accounts affected the balances of both assets and deposits.
Subordinated Debt
See Note (6) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.
Short-Term Borrowings and Lines of Credit
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 $203.5 million at March 31, 2023, compared to $300,000 at December 31, 2022. The increase in short-term borrowings was due to BancFirst taking a $200.0 million advance on its line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas, which was paid off on April 3, 2023. The Company has several lines of credit it can use. At March 31, 2023, BancFirst had $560.3 million available on its line of credit from the FHLB of Topeka, Kansas and a $25.0 million line of credit with another financial institution that is an overnight federal funds facility. Pegasus has a federal funds line of credit with BancFirst for $50.0 million. Worthington has a $25.0 million federal funds line of credit with BancFirst, a $10.5 million line of credit with another financial institution that is an overnight federal funds facility, a federal reserve discount window capacity of $28.2 million and a $69.9 million line of credit from the FHLB of Dallas, Texas.
Capital Resources
Stockholders’ equity totaled $1.3 billion at March 31, 2023 an increase of $60.0 million from December 31, 2022. In addition to net income of $57.5 million, other changes in stockholders’ equity during the three months ended March 31, 2023 included $642,000 related to common stock issuances for stock option exercises, $382,000 related to stock-based compensation and a $14.6 million increase in accumulated other comprehensive income that were partially offset by $13.2 million in dividends. The Company’s leverage ratio and total risk-based capital ratios at March 31, 2023, were well in excess of the regulatory requirements.
See Note (8) of the Notes to Consolidated Financial Statements for a discussion of capital ratios and requirements.
Liquidity Risk and Off-Balance Sheet Arrangements
There have not been any material changes in the Company’s liquidity risk and off-balance sheet arrangements 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, 2022.
36
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes in the Company’s disclosures regarding market risk since December 31, 2022, the date of its most recent annual report to stockholders.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s Chief Executive Officer, Chief Financial Officer and its Disclosure Committee, which includes the Company’s Executive Chairman, Chief Risk Officer, Chief Internal Auditor, Chief Asset Quality Officer, Controller, General Counsel and Director of Financial Reporting, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). 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.
Changes in Internal Control Over Financial Reporting. During the period to which this report relates, there have not been any changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, such controls.
37
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.
The following represents a material change in our risk factors from those disclosed in Part I – “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Recent negative developments in the banking industry could adversely affect our financial condition and results of operations.
The recent bank failures and related negative media attention have generated significant market trading volatility among publicly traded bank holding companies and, in particular, regional, as well as community banks like the Company. These developments have negatively impacted customer confidence in regional and community banks that are not considered too big to fail, which could prompt customers to move uninsured deposits to banks that are perceived as too big to fail. Further, competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and sweeps. If such movement is permanent, it will reduce our net interest margin going forward. The financial impact on the Company of ongoing market volatility, continued high inflation and rising interest rates will depend on future developments which are highly uncertain and difficult to predict.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
38
Item 6. Exhibits.
Exhibit |
|
Exhibit |
3.1* |
|
|
|
|
|
3.2 |
|
|
|
|
|
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** |
|
|
|
|
|
101.INS* |
|
Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH* |
|
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
101.CAL* |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
101.DEF* |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB* |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
|
|
|
101.PRE* |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
104* |
|
Cover page Interactive Data File (formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101) |
* Filed herewith.
** This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
BANCFIRST CORPORATION |
|
|
(Registrant) |
|
|
|
Date: May 9, 2023 |
|
/s/ David Harlow |
|
|
David Harlow |
|
|
President |
|
|
Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
|
|
Date: May 9, 2023 |
|
/s/ Kevin Lawrence |
|
|
Kevin Lawrence |
|
|
Executive Vice President |
|
|
Chief Financial Officer |
|
|
(Principal Financial Officer) |
40
Exhibit 3.1
CONTENTS
OF THE
AMENDED AND RESTATED
BYLAWS
OF
BANCFIRST CORPORATION
(As Amended and Restated – March 23, 2023)
|
|
ARTICLE |
|
|
|
I |
Offices |
II |
Shareholders’ Meetings |
III |
Directors |
IV |
Executive Committee |
V |
Compensation of Directors and Members of the Executive Committee |
VI |
Meetings of the Board |
VII |
Officers |
VIII |
The Chairman of the Board |
IX |
Chief Executive Officer |
X |
The President |
XI |
Vice Presidents |
XII |
The Treasurer |
XIII |
The Secretary |
XIV |
Corporate Seal |
XV |
Duties of Officers May Be Delegated |
XVI |
Certificates of Shares |
XVII |
Transfers of Shares |
XVIII |
Closing of Transfer Books |
XIX |
Registered Shareholders |
XX |
Lost Share Certificates |
XXI |
Inspection of Books and Records |
XXII |
Checks |
XXIII |
Fiscal Year |
XXIV |
Dividends |
XXV |
Directors’ Annual Statement: Annual Reports |
XXVI |
Notices |
XXVII |
Indemnification of Officers and Directors |
XXVIII |
Amendments |
AMENDED AND RESTATED
BYLAWS
OF
BANCFIRST CORPORATION
(As Amended and Restated March 23, 2023)
ARTICLE I
Offices
Section 1. The principal office of this corporation shall be located at 100 North Broadway Ave., Oklahoma City, OK 73102.
Section 2. The corporation may also have offices at such other places as the board of directors may from time to time appoint or the business of the corporation require.
ARTICLE II
Shareholders’ Meetings
Section 1. Unless otherwise determined by the board of directors, all meetings of the shareholders shall be held in the principal office of the corporation.
Section 2. The annual meeting of shareholders for the election of directors and for the transaction of any proper business shall be held at such time and date as the board of directors by resolution shall determine and set forth in the notice of the meeting. If the annual meeting of shareholders is not held on the date designated therefore, the board of directors shall cause the meeting to be held as soon thereafter as convenient. At each annual meeting the shareholders entitled to vote shall elect a board of directors and they may transact such other corporate business as may properly be brought before the meeting.
Section 3. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation or by these bylaws. If, however, such majority shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have power to adjourn the meeting from time to time, without notice other than an announcement at the meeting, if such meeting is adjourned to a date within thirty (30) days of the meeting as originally scheduled, until the requisite amount of voting stock shall be present. At such adjourned meeting at which the requisite amount of voting stock shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 4. At each meeting of the shareholders, every shareholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such shareholder and bearing a date not more than eleven (11) months prior to the date of exercise of said proxy, unless said instrument provides for a longer period, not to exceed
1
seven (7) years, which instrument shall be filed with the secretary of the corporation at or before the meeting. Unless demanded by a shareholder, proxy or other person entitled to vote at the meeting, no vote need be by ballot, and voting need not be conducted by inspectors. Subject to the provisions of Article III, Section 4, herein, nominees for election as directors must receive a “for” vote of the majority of the shares voting on the election; provided, however that if, as of the tenth (10th) day preceding the date the corporation first transmits its notice of meeting for such meeting to the stockholders of the corporation, or at any time thereafter, the number of nominees exceeds the number of directors to be elected (a “contested election:”), the directors shall be elected by a “for” vote of plurality of the shares voting on the election. All other proposals shall be decided by a majority vote of the shares outstanding and entitled to vote at such meeting, unless otherwise provided by law.
Section 5. Written notice of the meetings of shareholders stating the time, place and purpose thereof shall be mailed by the Secretary to each shareholder entitled to vote thereat at such address as appears on the share ledger of the corporation not less than seven (7) days prior to the meeting. Whenever a greater period of notice is required by law, the notice shall be sent in accordance with such law.
Section 6. Except as otherwise provided by law, for the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or for any other proper purpose, the board of directors may fix, in advance, a record date, to be not less than ten (10) nor more than sixty (60) days preceding the meeting, and in such case only registered shareholders on the record date shall be entitled to notice of such meeting and to vote at such meeting.
Section 7. A share ledger in which the names of the shareholders are arranged alphabetically by classes of shares, if any, shall be maintained and open for inspection at the place of the shareholders’ meeting during the business hours at least one (1) full day immediately preceding the meeting and until the close of the meeting.
Section 8. Special meetings of the shareholders for any purpose, or purposes, unless otherwise provided by statute, may be called by the Chairman, the President, the board of directors or shareholders owning not less than ten percent (10%) in amount of the entire capital stock of the corporation issued and outstanding, and entitled to vote and, upon written request by any person or persons so empowered to call meetings to the President or the Secretary, such officer shall give notice of such meeting, which date fixed by such officer shall not be less than ten (10) nor more than sixty (60) days after receipt of such written request.
Section 9. Business transacted at all special meetings shall be confined to the objects stated in the call, except as provided in Section 11 of this Article.
Section 10. Whenever any notice whatsoever is required to be given by law or these bylaws, a written waiver of notice signed by any shareholder entitled thereto shall be deemed equivalent to the actual giving of such notice.
2
Section 11. Any transaction of the shareholders at any meeting shall be valid regardless of how or whether call was made or notice given if a quorum be present in person or by proxy and (1) if, at any time, either before or after the meeting, each shareholder entitled to notice and to vote and not present in person or by proxy signs a written waiver of notice, or consent, or an approval of the minutes thereof, or (2) if such transactions have been or are thereafter approved and ratified at a regular or special shareholders’ meeting held upon regular call or notice.
Section 12. Notwithstanding anything contained in these bylaws or the Certificate of Incorporation to the contrary, any action which might be taken at a meeting of the shareholders may be taken without a meeting if a record or memorandum thereof be made in writing and signed by a majority of the holders of shares who would be entitled to vote at a meeting for such purpose and such record or memorandum be filed with the secretary and made a part of the corporate records.
ARTICLE III
Directors
Section 1. The property and business of the corporation shall be managed and the authority and powers of the corporation shall be exercised by its board of directors, consisting of not less than three (3) nor more than twenty-five (25) in number. Each director shall be elected to serve for a term of one year and until his successor shall be elected and qualified.
Section 2. The directors may hold their meetings and have one or more offices, and keep the books of the corporation at the registered office of the corporation in Oklahoma City, Oklahoma, or at such other place or places as they may from time to time determine.
Section 3. In addition to the powers and authorities by these bylaws expressly conferred upon them, the board may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these bylaws directed or required to be exercised or done by the holders of the issued and outstanding shares entitled to vote.
Section 4. (a) Unless otherwise provided by law, any director, whether elected by the shareholders or appointed by the board of directors, may be removed from office, with or without cause, at any time by the affirmative vote of a majority of the voting shares present at any meeting of the shareholders at which a quorum of the issued and outstanding voting shares are present. In case the board or any one or more directors be so removed, new directors may be elected at the same meeting.
(b) In the event an incumbent director, whether one or more, or any nominee standing for election to a vacant seat on the Board of Directors, fails to receive the number of votes required for their election, that individual shall not be elected to the Board of Directors and shall not serve for the ensuing term.
Section 5. Except as provided in Section 4 of this Article, vacancies in the board of directors shall be filled by the remaining members of the board, though less than a quorum, and
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each person so elected shall continue as a member of the board until he resigns or is removed there from as provided by law or until his successor is elected by the shareholders.
ARTICLE IV
Executive Committee
Section 1. The board of directors may, by resolution passed by a majority of the whole board, designate two (2) or more directors to constitute an Executive Committee. Said committee may meet at a stated time, or on notice to all by any of their own number. During the intervals between meetings of the board, such committee shall advise with and aid the officers of the corporation in all matters concerning its interests and the management if its business, and generally perform such duties and exercise such powers as may be directed or delegated by the board of directors from time to time. The board may delegate to such committee authority to exercise all the powers of the board, excepting power to amend the bylaws, while the board is not in session. The Executive Committee shall be subject at all times to the control and direction of the board. Vacancies in the membership of the committee may be filled by the board of directors at any regular or special meeting of the board.
Section 2. The Executive Committee shall keep regular minutes of its proceedings and report the same to the board as and when required.
ARTICLE V
Compensation of Directors and Members
of the Executive Committee
Section 1. Directors and members of the Executive Committee, as such, shall not receive any stated salary for their services, but by resolution of the Board, shall be engaged by an annual retainer payable on a monthly basis at such meeting of the Board or Committee; provided that nothing herein contained shall be construed to preclude any director or committee member from serving the corporation in any other capacity and receiving compensation therefore.
ARTICLE VI
Meetings of the Board
Section 1. The annual meeting of the board shall be held immediately following and at such place as shall be fixed for the shareholders’ annual meeting, for the purpose of transaction any business which shall come before the meeting, and no notice of such meeting shall be necessary in order legally to constitute such meeting, provided a quorum is present; or the board may hold its annual meeting at such time and place as shall be fixed by the consent in writing of all the directors, or as otherwise determined by a majority of the members of the board at a meeting duly called.
Section 2. Special meetings of the board of directors shall be called by the Chairman or President, or, upon either of such person’s inability or refusal to act, by the Secretary, or by any two directors. Written notice of the time, place and purpose of the meeting shall be given to each
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director, in writing, either personally or by e-mail or other means of electronic notice, three days prior to the meeting, or by mail at least seven days prior to such meeting.
Section 3. At all meetings of the board a majority of the directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute, or by the Certificate of Incorporation, or by these bylaws.
Section 4. Any director may, in writing, waive notice of any meeting of the board, either before or after the meeting.
Section 5. Any action which might be taken at a meeting of the board of directors may be taken without a meeting if a record or memorandum thereof be made in writing and signed by all the members of the board.
ARTICLE VII
Officers
Section 1. The officers of the corporation shall be chosen by the directors at the meeting of the board of directors first following the annual meeting of shareholders, at which time the directors shall select a President, Secretary and Treasurer and may be a Chairman of the Board, as many Vice Presidents, Assistant Secretaries and Assistant Treasurers as the directors shall from time to time deem advisable. Any two or more corporate offices, except those of President and Secretary, or President and Vice President, may be held simultaneously by the same person.
Section 2. The board may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board.
Section 3. The salaries of all executive officers of the corporation shall be approved by the board of directors, or by a compensation committee selected by the board of directors, upon recommendations submitted by the Chief Executive Officer of the corporation. The board of directors or the compensation committee shall determine and fix the salary of the Chief Executive Officer.
Section 4. The officers of the corporation shall hold office until their successors are elected and qualified or as determined by the board of directors.
Section 5. Any officer elected or appointed by the board of directors may be removed from office, with or without cause, at any time by the Chief Executive Officer or President. The Chief Executive Officer and President may be removed by the affirmative vote of a majority of the directors present at any meeting of the board at which a quorum is present.
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ARTICLE VIII
The Chairman of the Board
Section 1. The Chairman of the Board, if one has been elected, shall preside at all meetings of shareholders, and the board of directors.
ARTICLE IX
Chief Executive Officer
Section 1. If the board of directors has elected a Chairman of the Board it may designate the Chairman of the Board as the Chief Executive Officer of the corporation. If no Chairman of the Board has been elected, or in his absence or inability to act or if no such designation has been made by the board of directors, the President shall be the Chief Executive Officer of the corporation. The Chief Executive Officer shall (i) have the overall supervision of the business of the corporation and shall direct the affairs and policies of the corporation, subject to any directions which may be given by the board of directors, (ii) shall have authority to designate the duties and powers of officers and delegate special powers and duties to specified officers, so long as such designations shall not be inconsistent with the statutes, these bylaws or action of the board of directors and (iii) shall in general have all other powers and shall perform all other duties incident to the Chief Executive Officer of a corporation and such other powers and duties as may be prescribed by the board of directors from time to time.
ARTICLE X
The President
Section 1. If the board of directors has elected a Chairman of the Board and designated such officer as the Chief Executive Officer of the corporation, the President shall be subject to the direction of the board of directors and the Chairman of the Board. He shall have such powers and perform such duties as from time to time may be assigned to him by the board of directors or the Chairman of the Board.
Section 2. If the board of directors has not elected a Chairman of the Board, or, if one has been elected and has not been designated Chief Executive Officer of the corporation, then the President shall be the Chief Executive Officer of the corporation with the powers and duties provided in Article IX of these bylaws.
Section 3. In any event, the President shall have power to execute, and shall execute, bonds, deeds, mortgages, extension agreements, modifications of mortgage agreements, leases and contracts or other instruments of the corporation except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors or by the President to some other officer or agent of the corporation. The President may sign, with the Secretary or an Assistant Secretary, certificates for shares of stock of the corporation, the issuance of which shall have been duly authorized by the board of directors, and shall vote, or give proxy to any other person to vote, all shares of the stock of any other corporation standing in the name of the corporation. The President in general
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shall have all other powers and shall perform all other duties as may be prescribed by the board of directors from time to time.
ARTICLE XI
Vice Presidents
Section 1. In the absence of the President, or in the event of his inability or refusal to act, the Vice Presidents in order of their rank as fixed by the board of directors or, if not ranked, the Vice Presidents designated by the board of directors as Chief Executive Officer, shall perform all duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties, not inconsistent with the statutes, these bylaws, or action of the board of directors or the President. Any Vice President may sign, with the Secretary or an Assistant Secretary, certificates for shares of stock of the corporation, the issuance of which shall have been duly authorized by the board of directors.
ARTICLE XII
The Treasurer
Section 1. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors.
Section 2. The Treasurer shall disburse the funds of the corporation as may be ordered by the president or the board, taking proper vouchers for such disbursements, and shall render to the president and directors, at the annual meeting of the board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation.
Section 3. The Treasurer may also serve as the Chief Financial Officer of the corporation upon designation by the board of directors.
Section 4. Assistant Treasurers, if any there be, shall assist the Treasurer in performance of his duties, and shall have such other powers and perform such other duties, not inconsistent with the statutes, these bylaws, or action of the board of directors, as from time to time may be prescribed for them, respectively, by the board of directors or the Treasurer.
ARTICLE XIII
The Secretary
Section 1. The Secretary shall attend all sessions of the board of directors and all meetings of the shareholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall keep in safe custody the seal of the corporation and affix the same to any instrument requiring it; and shall perform like duties for the Executive Committee when required. He shall give, or cause to be given, notice of all meetings of the shareholders and
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of the board of directors, and shall perform such other duties as may be prescribed by the board of directors, Chairman or President, all subject to the supervision of the Chairman or President.
Section 2. Assistant Secretaries, if any there be, shall assist the Secretary in performance of his duties, and shall have such other powers and perform such other duties, not inconsistent with the statutes, these bylaws, or action of the board of directors, as from time to time may be prescribed for them, respectively, by the board of directors or the Secretary.
ARTICLE XIV
Corporate Seal
Section 1. The corporate seal shall have inscribed thereon the name of the corporation and the words “Corporate Seal” and “Oklahoma” or an abbreviation thereof.
ARTICLE XV
Duties of Officers May be Delegated
Section 1. In case of the absence of any officer of the corporation, or for any other reason that the board may deem sufficient, the board may delegate, for the time being, the powers or duties, or any of them of such officer to any other officer or to any director, provided a majority of the entire board concurs therein.
ARTICLE XVI
Certificates of Stocks
Section 1. The shares of stock of the Corporation may be represented by certificates in such form as may be approved by the board of directors. The certificates of stock of the corporation shall be numbered and shall be entered in the books of the corporation as they are issued. They shall contain the name of the corporation and state that it is incorporated under the laws of Oklahoma and other statements as may be required by law. They shall exhibit the holder’s name, the number of shares and par value thereof and shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary. Where, however, such certificate is signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the corporation, and a registrar, the signatures of any of the above-named officers may be by facsimile. Notwithstanding the foregoing provisions regarding share certificates, officers of the corporation may provide that some or all of any or all of classes or series of the corporation’s common or any preferred shares may be uncertificated shares.
ARTICLE XVII
Transfer of Stock
Section 1. Transfers of stock shall be made on the books of the corporation only by the person named in the certificate, or in the case of uncertificated shares by the person named as the owner on the corporation’s direct registry system, or by an attorney, lawfully constituted in writing, and upon surrender of the certificate therefore and in full and complete compliance with all of the
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terms and conditions set forth on such certificate, applicable statutes, the Certificate of Incorporation and these bylaws.
ARTICLE XVIII
Closing of Transfer Books
Section 1. The board of directors may close the share transfer books against any transfers of shares during any shareholders’ meeting or adjournment thereof, and during a period from the record date through the close of any meeting, annual or special, of the shareholders, or for such period until the close of the date appointed for the payment of any dividend or distribution or the date for the allotment of rights or when any change, conversion or exchange of shares shall be made or go into effect. Unless otherwise provided in the resolution of the board, the fixing of a record date as provided in Article II, transfer of shares during the period not to exceed sixty (60) days.
ARTICLE XIX
Registered Stockholders
Section 1. The corporation shall be entitled to treat the holder of record of any share or shares at the record date as the holder and owner in fact thereof, and accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as may be otherwise expressly provided by the laws of Oklahoma.
ARTICLE XX
Lost Share Certificates
Section 1. Any person claiming a certificate of shares to be lost, destroyed or wrongfully taken shall make an affidavit or affirmation of that fact and advertise the same in such manner as the board of directors, or its designee, may require, but the board of directors may waive advertising, and such person shall, if the directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the board, in at least double the value of the shares represented by said certificate, whereupon if the corporation is without notice that the security has been acquired by a bona fide purchaser, a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost, destroyed or wrongfully taken.
ARTICLE XXI
Inspection of Books and Records
Section 1. The directors shall determine from time to time whether, and, if allowed, when and under what conditions and regulations, the accounts and books of the corporation (except such as may by statute be specifically open to inspection), or any of them, shall be open to the inspection of the shareholders, and the shareholders’ rights in this respect are and shall be restricted and limited accordingly.
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ARTICLE XXII
Checks
Section 1. Except as otherwise provided by resolution of the board of directors, all checks or demands for money and notes of the corporation shall be signed by the president, vice president, secretary or treasurer.
ARTICLE XXIII
Fiscal Year
Section 1. The fiscal year shall be the year ending December 31 of each year unless otherwise determined by the board of directors.
ARTICLE XXIV
Dividends
Section 1. Dividends upon the capital stock of the corporation may be declared by the board of directors at any meeting of the board.
Section 2. Before payment of any dividend, or making any distribution of profits, there may be set aside out of the surplus or net profits of the corporation such sum or sums as the directors from time to time, in their absolute discretion think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation.
ARTICLE XXV
Directors’ Annual Statement: Annual Reports
Section 1. The board of directors shall present at each annual meeting of the shareholders, and when called for by vote of the shareholders at any special meeting, a full and clear statement of the business and condition of the corporation.
Section 2. An annual report shall be sent to the shareholders in advance of the annual meeting.
ARTICLE XXVI
Notices
Section 1. Whenever under any of the provisions of these bylaws notice is required to be given to any director, officer or stockholder, it shall not be construed to mean actual notice, but such notice may be given in writing, by depositing in the United States mails, postage prepaid, addressed to such stockholder, officer or director at such address as appears on the books of the corporation, or by causing an electronic notice thereof, to be transmitted to such person at such address.
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Section 2. Any shareholder, director or officer may waive any notice required to be given under these bylaws, or by statutes of the State of Oklahoma or the Articles of Incorporation to the extent permitted by the Statutes of the State of Oklahoma and the Articles of Incorporation.
ARTICLE XXVII
Indemnification of Directors and Officers
Section 1. Actions Other than in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer, of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture or other enterprise against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the corporation, or is or was serving at the request of the corporation, as a director or officer of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorney’s fees) actually and reasonable believed to be in or not opposed to the best interest of the corporation; except that no indemnification shall be made in respect of any claim, issue or matter for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine, upon application, that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonable entitled to indemnity for such expenses which the court shall deem proper.
Section 3. Determination of Right to Indemnity. Any indemnification under Section1 or Section 2 above (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standards of conduct set forth in Section 1 or Section 2. Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding (“disinterested directors”), or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders.
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Section 4. Advancement of Expenses. Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if he is not ultimately able to demonstrate that he is entitled to be indemnified by the corporation as authorized herein.
Section 5. Insurance. The corporation may purchase (upon resolution duly adopted by the board of directors) and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director of officer of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability.
Section 6. Indemnification Required. To the extent that a director or officer of the corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to herein or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.
Section 7. Non-exclusivity. The right of indemnification and advancement of expenses hereinabove provided shall not be deemed exclusive of any rights to which any such person may now or hereafter be otherwise entitled and specifically, without limiting the generality of the foregoing, shall not be deemed exclusive of any rights pursuant to statute or otherwise, of any such person in any such action, suit or proceeding to have assessed or allowed in his favor against the corporation or otherwise, his costs and expenses incurred therein or in connection therewith or any part thereof.
Section 8. Prohibitions. Notwithstanding any of the foregoing, the right of indemnification shall not be available to any director or officer in connection with any liability or legal expense incurred or imposed in any proceeding brought by any federal banking agency that results in a settlement or final order where the corporation’s director or officer is assessed a civil money penalty, is removed or prohibited from engaging in banking activities, or directs the director or officer to cease an action or take any affirmative action regarding the corporation or its financial institution subsidiary.
ARTICLE XXVIII
Amendments
Section 1. Subject to the provisions of the Articles of Incorporation and the laws of the State of Oklahoma, these bylaws may be amended, altered, repealed, revised, or supplemented upon resolution adopted by the directors at any meeting or by written memorandum signed by all the directors or upon resolution of the shareholders at any annual or special meeting called for that purpose upon proper notice, or by written memorandum of action signed by shareholders owning a majority in amount of the capital stock of the corporation issued and outstanding, and entitled to vote.
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Exhibit 31.1
CEO’S CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
I, David Harlow, certify that:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date: May 9, 2023 |
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/s/ David Harlow |
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David Harlow |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
Exhibit 31.2
CFO’S CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
I, Kevin Lawrence, certify that:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date: May 9, 2023 |
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/s/ Kevin Lawrence |
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Kevin Lawrence |
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Executive Vice President |
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Chief Financial Officer |
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(Principal Financial Officer) |
Exhibit 32
Certification of periodic report
pursuant to section 906 of the sarbanes-oxley act of 2002
I, David Harlow, Chief Executive Officer and Kevin Lawrence, Chief Financial Officer of BancFirst Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
Dated: May 9, 2023
/s/ David Harlow |
David Harlow |
President and Chief Executive Officer |
(Principal Executive Officer) |
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/s/ Kevin Lawrence |
Kevin Lawrence |
Executive Vice President |
and Chief Financial Officer |
(Principal Financial Officer) |
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