BancFirst: Bancfirst Corporation Reports Third Quarter Earnings

Oklahoma City, Oct. 19, 2023 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS:BANF) reported net income of $51.0 million, or $1.52 diluted earnings per share, for the third quarter of 2023 compared to net income of $55.4 million, or $1.65 diluted earnings per share, for the third quarter of 2022. Net income for the nine months ended September 30, 2023 was $163.5 million, or $4.88 per share, compared to $136.0 million, or $4.07 per share, for the nine months ended September 30, 2022 .

The Company's net interest income for the third quarter of 2023 increased to $104.3 million compared to $100.9 million for the quarter ended September 30, 2022 . Rising short-term interest rates and loan growth drove the increase. The net interest margin for the quarter was 3.73% compared to 3.87% in the second quarter and 3.48% a year ago. The decrease in margin from the second quarter was largely due to an increase in deposit rates and a shift in deposit mix from noninterest bearing to interest bearing deposits. For the third quarter of 2023, the Company recorded a provision for credit losses of $2.3 million for loan growth, compared to $2.9 million for the third quarter of 2022.

Noninterest income for the quarter totaled $44.4 million, compared to $49.3 million last year. The decrease in noninterest income was attributable to the reduction of interchange fees of approximately $5.4 million related to the impact of the Durbin amendment as the Company now exceeds $10 billion in total assets. In addition, noninterest income for the third quarter of 2022 included $3.2 million of income from an equity interest received from a prior loan settlement, which was sold during the second quarter of 2023.

Noninterest expense for the quarter increased to $81.2 million compared to $79.1 million last year. Higher noninterest expense was primarily related to an increase in salaries and employee benefits of $2.5 million .

The Company's effective tax rate for the period was 21.8% compared to 19.0% for the third quarter of 2022. During the first quarter of 2023, the Company adopted ASU 2023-02 which increased income tax expense. Additionally, the lower effective tax rate in 2022 stemmed from the exercise of stock options during the quarter.

At September 30, 2023, the Company's total assets were $12.1 billion, a decrease of $273.3 million from December 31, 2022 . Loans totaled $7.5 billion, an increase of $526.7 million from December 31, 2022 . Liquidity remained strong with cash at $2.3 billion and a quarterly average loan to deposit ratio of 70.6% at September 30, 2023 compared to 62.3% at year-end. Deposits totaled $10.5 billion, $440.1 million below December 31, 2022 as some large commercial deposits moved from demand accounts into the Company's off balance sheet sweep product. Sweep accounts totaled $4.0 billion at September 30, 2023 up $285.3 million from December 31, 2022 . The Company continues to fund itself with community based deposits and does not use brokered or reciprocal deposits. The Company's total stockholders' equity was $1.4 billion, an increase of $119.7 million above December 31, 2022 .

Asset quality remained strong with nonaccrual loans of $16.7 million, representing 0.22% of total loans at both September 30, 2023 and December 31, 2022. The allowance for credit losses to total loans stood at 1.31% at September 30, 2023 virtually unchanged from 1.33% at December 31, 2022 . Net charge-offs were 0.02% of average loans for the third quarter of 2023 compared to 0.00% for the third quarter of 2022.

BancFirst Corporation CEO David Harlow commented, "The Company reported a solid quarter at $1.52 diluted earnings per share despite the impact of the first full quarter of reduced interchange fees under the Durbin Amendment. Continuing headwinds in the coming months include deposit pricing pressure and increased overhead required to meet the regulatory requirements for a holding company with assets exceeding $10 billion . Regardless, our talented bankers combined with the Company's fortress balance sheet and top-tier liquidity position us to compete favorably in the markets that we serve."

BancFirst Corporation (the Company) is an Oklahoma based financial services holding company. The Company operates three subsidiary banks, BancFirst, an Oklahoma state-chartered bank with 106 banking locations serving 59 communities across Oklahoma, Pegasus Bank, with 3 banking locations in the Dallas Metroplex area and Worthington Bank with 3 locations in the Fort Worth Metroplex area, 1 location in Arlington Texas and 1 location in Denton Texas . More information can be found at www.bancfirst.bank.

The Company may make forward-looking statements within the meaning of Section 27A of the securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management's current expectations or forecasts of future events. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions, the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Actual results may differ materially from forward-looking statements.

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		2023		2023		2023		2022		2022
		3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Condensed Income Statements:
Net interest income		$ 104,308		$ 105,926		$ 109,156		$ 110,352		$ 100,947
Provision for credit losses		2,312		2,824		2,322		3,776		2,863
Noninterest income:
Trust revenue		4,866		4,590		4,222		4,065		4,125
Service charges on deposits		17,027		22,268		21,231		21,603		22,161
Securities transactions		(361)		110		(213)		1,116		966
Income from sales of loans		734		757		604		657		969
Insurance commissions		8,429		6,225		8,741		6,656		7,498
Cash management		8,177		7,927		6,734		6,124		5,624
Other		5,577		6,097		6,509		7,947		7,988
Total noninterest income		44,449		47,974		47,828		48,168		49,331
Noninterest expense:
Salaries and employee benefits		50,200		49,803		49,252		48,019		47,741
Occupancy expense, net		5,487		5,118		4,983		5,259		4,930
Depreciation		4,685		4,769		4,643		4,566		4,612
Amortization of intangible assets		885		880		880		880		880
Data processing services		1,820		2,217		2,107		1,928		1,876
Net expense from other real estate owned		2,720		2,889		2,459		6,235		2,392
Marketing and business promotion		2,034		1,900		2,527		2,465		1,945
Deposit insurance		1,419		1,463		1,613		1,209		1,202
Other		11,965		12,071		11,853		14,044		13,500
Total noninterest expense		81,215		81,110		80,317		84,605		79,078
Income before income taxes		65,230		69,966		74,345		70,139		68,337
Income tax expense		14,242		14,956		16,812		13,013		12,985
Net income		$ 50,988		$ 55,010		$ 57,533		$ 57,126		$ 55,352
Per Common Share Data:
Net income-basic		$ 1.55		$ 1.67		$ 1.75		$ 1.74		$ 1.69
Net income-diluted		1.52		1.64		1.72		1.70		1.65
Cash dividends declared		0.43		0.40		0.40		0.40		0.40
Common shares outstanding		32,921,393		32,939,256		32,899,493		32,875,560		32,856,387
Average common shares outstanding -
Basic		32,937,149		32,920,497		32,892,857		32,868,087		32,825,931
Diluted		33,539,389		33,467,254		33,462,379		33,503,937		33,536,558
Performance Ratios:
Return on average assets		1.68 %		1.85 %		1.90 %		1.82 %		1.75 %
Return on average stockholders' equity		14.93		16.59		18.31		18.62		18.13
Net interest margin		3.73		3.87		3.89		3.83		3.48
Efficiency ratio		54.60		52.70		51.16		53.37		52.62

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		Nine months ended
		September 30,
		2023		2022
Condensed Income Statements:
Net interest income		$ 319,390		$ 263,321
Provision for credit losses		7,458		6,300
Noninterest income:
Trust revenue		13,678		11,580
Service charges on deposits		60,526		65,154
Securities transactions		(464)		(2,949)
Income from sales of loans		2,095		3,891
Insurance commissions		23,395		20,227
Cash management		22,838		13,202
Other		18,183		24,474
Total noninterest income		140,251		135,579
Noninterest expense:
Salaries and employee benefits		149,255		136,957
Occupancy expense, net		15,588		14,067
Depreciation		14,097		14,034
Amortization of intangible assets		2,645		2,568
Data processing services		6,144		5,656
Net expense from other real estate owned		8,068		3,676
Marketing and business promotion		6,461		5,609
Deposit insurance		4,495		3,526
Other		35,889		39,214
Total noninterest expense		242,642		225,307
Income before income taxes		209,541		167,293
Income tax expense		46,010		31,319
Net income		$ 163,531		$ 135,974
Per Common Share Data:
Net income-basic		$ 4.97		$ 4.15
Net income-diluted		4.88		4.07
Cash dividends declared		1.23		1.12
Common shares outstanding		32,921,393		32,856,387
Average common shares outstanding -
Basic		32,916,996		32,748,116
Diluted		33,493,015		33,429,161
Performance Ratios:
Return on average assets		1.81 %		1.47 %
Return on average stockholders' equity		16.56		15.24
Net interest margin		3.83		3.11
Efficiency ratio		52.79		56.48

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		2023		2023		2023		2022		2022
		3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Balance Sheet Data:
Total assets		$ 12,114,602		$ 12,020,265		$ 12,332,105		$ 12,387,863		$ 12,452,378
Interest-bearing deposits with banks		2,134,081		2,188,004		2,623,565		2,909,861		3,106,279
Debt securities		1,525,448		1,570,620		1,618,233		1,540,604		1,521,645
Total loans		7,476,474		7,307,475		7,124,831		6,949,795		6,832,595
Allowance for credit losses		(97,776)		(96,920)		(94,760)		(92,728)		(89,871)
Deposits		10,534,171		10,475,180		10,610,103		10,974,228		11,058,940
Stockholders' equity		1,370,584		1,340,791		1,310,882		1,250,836		1,195,149
Book value per common share		41.63		40.70		39.85		38.05		36.37
Tangible book value per common share (non-GAAP)(1)		35.56		34.62		33.73		31.90		30.20
Balance Sheet Ratios:
Average loans to deposits		70.61 %		69.85 %		64.54 %		62.25 %		59.62 %
Average earning assets to total assets		92.39		92.23		92.52		92.14		91.58
Average stockholders' equity to average assets		11.28		11.17		10.36		9.80		9.63
Asset Quality Data:
Past due loans		$ 12,575		$ 8,799		$ 7,258		$ 7,085		$ 3,167
Nonaccrual loans (3)		16,676		18,047		17,649		15,299		11,962
Other real estate owned and repossessed assets		42,782		41,612		38,874		36,936		39,419
Nonaccrual loans to total loans		0.22 %		0.25 %		0.25 %		0.22 %		0.18 %
Allowance to total loans		1.31		1.33		1.33		1.33		1.32
Allowance to nonaccrual loans		586.34		537.05		536.93		606.10		751.32
Net charge-offs to average loans		0.02		0.01		0.00		0.01		0.00
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(2):
Stockholders' equity		$ 1,370,584		$ 1,340,791		$ 1,310,882		$ 1,250,836		$ 1,195,149
Less goodwill		182,263		182,055		182,055		182,055		182,055
Less intangible assets, net		17,591		18,223		19,103		19,983		20,863
Tangible stockholders' equity (non-GAAP)		$ 1,170,730		$ 1,140,513		$ 1,109,724		$ 1,048,798		$ 992,231
Common shares outstanding		32,921,393		32,939,256		32,899,493		32,875,560		32,856,387
Tangible book value per common share (non-GAAP)		$ 35.56		$ 34.62		$ 33.73		$ 31.90		$ 30.20

(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 $5.7 million of nonaccrual loans at September 30, 2023.

BancFirst Corporation Consolidated Average Balance Sheets And Interest Margin Analysis Taxable Equivalent Basis (Dollars in thousands - Unaudited)
		Three Months Ended						Nine Months Ended
		September 30, 2023						September 30, 2023
				Interest		Average				Interest		Average
		Average		Income/		Yield/		Average		Income/		Yield/
		Balance		Expense		Rate		Balance		Expense		Rate
ASSETS
Earning assets:
Loans		$ 7,379,572		$ 122,005		6.56	%	$ 7,212,231		$ 341,194		6.33	%
Debt securities - taxable		1,552,590		9,260		2.37		1,576,358		27,659		2.35
Debt securities - tax exempt		2,990		27		3.61		3,239		65		2.70
Interest bearing deposits with banks and FFS		2,162,655		29,052		5.33		2,362,174		87,879		4.97
Total earning assets		11,097,807		160,344		5.73		11,154,002		456,797		5.48
Nonearning assets:
Cash and due from banks		197,702						205,269
Interest receivable and other assets		813,824						810,025
Allowance for credit losses		(97,591)						(95,614)
Total nonearning assets		913,935						919,680
Total assets		$ 12,011,742						$ 12,073,682
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Transaction deposits		$ 804,122		$ 2,002		0.99	%	$ 859,301		$ 5,271		0.82	%
Savings deposits		4,646,598		46,292		3.95		4,510,005		114,450		3.39
Time deposits		816,779		6,544		3.18		756,962		14,026		2.48
Short-term borrowings		4,937		49		3.94		7,324		261		4.76
Subordinated debt		86,077		1,030		4.75		86,063		3,091		4.80
Total interest bearing liabilities		6,358,513		55,917		3.49		6,219,655		137,099		2.95
Interest free funds:
Noninterest bearing deposits		4,183,422						4,432,349
Interest payable and other liabilities		114,867						101,574
Stockholders' equity		1,354,940						1,320,104
Total interest free funds		5,653,229						5,854,027
Total liabilities and stockholders' equity		$ 12,011,742						$ 12,073,682
Net interest income				$ 104,427						$ 319,698
Net interest spread						2.24	%					2.53	%
Effect of interest free funds						1.49	%					1.30	%
Net interest margin						3.73	%					3.83	%

SOURCE BancFirst