BANCFIRST CORP /OK/ (Form: 10-Q, Received: 08/09/2004 14:21:56)

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended June 30, 2004

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

For the transition period from to

Commission File Number 0-14384

BancFirst Corporation

(Exact name of registrant as specified in charter)

Oklahoma

73-1221379

(State or other Jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

101 N. Broadway, Oklahoma City, Oklahoma

73102-8401

(Address of principal executive offices)

(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal

year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ .

Indicate by checkmark whether the registrant is an accelerate filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨ .

As of July 31, 2004 there were 7,823,951 shares of the registrant’s Common Stock outstanding.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEET

(Unaudited)

(Dollars in thousands)


	June 30,						December 31, 2003
	2004			2003			December 31, 2003
ASSETS
Cash and due from banks	$	140,219		$	143,292		$	155,367
Interest-bearing deposits with banks		1,639			19,623			3,761
Federal funds sold		211,000			231,000			105,809
Securities (market value: $571,575, $533,305 and $566,461, respectively)		570,423			530,644			564,735
Loans:
Total loans (net of unearned interest)		1,963,888			1,797,364			1,947,223
Allowance for loan losses		(25,921	)		(25,004	)		(26,148	)

Loans, net		1,937,967			1,772,360			1,921,075
Premises and equipment, net		67,364			60,746			66,423
Other real estate owned		3,405			2,638			3,428
Intangible assets, net		4,372			1,187			4,726
Goodwill		27,946			20,235			27,611
Accrued interest receivable		18,016			19,171			19,006
Other assets		52,432			47,436			49,428

Total assets	$	3,034,783		$	2,848,332		$	2,921,369

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	784,622		$	655,838		$	720,366
Interest-bearing		1,883,844			1,846,466			1,865,324

Total deposits		2,668,466			2,502,304			2,585,690
Short-term borrowings		21,042			28,788			16,610
Accrued interest payable		3,529			4,227			3,741
Other liabilities		18,109			23,044			21,546
Long-term borrowings		8,677			13,356			11,063
Junior subordinated debentures		51,804			25,000			25,000
Minority interest		2,196			2,299			2,347

Total liabilities		2,773,823			2,599,018			2,665,997

Commitments and contingent liabilities
Stockholders’ equity:
Common stock, $1.00 par (shares issued and outstanding: 7,825,923, 7,803,239 and 7,822,637, respectively)		7,826			7,803			7,823
Capital surplus		62,085			59,996			60,819
Retained earnings		187,777			165,651			176,893
Accumulated other comprehensive income, net of income tax of $1,364, $7,830 and $5,128, respectively		3,272			15,864			9,837

Total stockholders’ equity		260,960			249,314			255,372

Total liabilities and stockholders’ equity	$	3,034,783		$	2,848,332		$	2,921,369

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
INTEREST INCOME
Loans, including fees	$	28,792		$	28,906		$	57,342		$	58,087
Securities:
Taxable		5,213			5,573			10,295			11,719
Tax-exempt		368			397			758			828
Federal funds sold		690			782			1,180			1,228
Interest-bearing deposits with banks		5			22			22			39

Total interest income		35,068			35,680			69,597			71,901

INTEREST EXPENSE
Deposits		5,448			7,525			11,019			15,857
Short-term borrowings		45			89			125			157
Long-term borrowings		141			418			298			887
Junior subordinated debentures		1,103			611			1,904			1,223

Total interest expense		6,737			8,643			13,346			18,124

Net interest income		28,331			27,037			56,251			53,777
Provision for loan losses		201			1,062			921			1,845

Net interest income after provision for loan losses		28,130			25,975			55,330			51,932

NONINTEREST INCOME
Trust revenue		1,089			1,126			2,124			2,175
Service charges on deposits		7,062			6,545			13,674			12,609
Securities transactions		(148	)		2,462			(148	)		3,079
Income from sales of loans		414			653			680			1,055
Other		4,325			3,190			8,114			6,838

Total noninterest income		12,742			13,976			24,444			25,756

NONINTEREST EXPENSE
Salaries and employee benefits		15,757			14,366			31,562			28,381
Occupancy and fixed assets expense, net		1,585			1,363			3,207			2,777
Depreciation		1,519			1,306			2,889			2,541
Amortization of intangible assets		169			137			354			284
Data processing services		627			550			1,282			1,101
Net expense from other real estate owned		201			30			281			7
Loss on early extinguishment of debt		—			2,429			—			2,429
Marketing and business promotion		896			717			1,610			1,367
Other		6,803			6,465			12,563			13,065

Total noninterest expense		27,557			27,363			53,748			51,952

Income before taxes		13,315			12,588			26,026			25,736
Income tax expense		(4,677	)		(4,516	)		(9,197	)		(9,066	)

Net income		8,638			8,072			16,829			16,670
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities		(8,436	)		2,529			(6,661	)		1,966
Reclassification adjustment for (gains) losses included in net income		96			(1,601	)		96			(2,001	)

Comprehensive income	$	298		$	9,000		$	10,264		$	16,635

NET INCOME PER COMMON SHARE
Basic	$	1.10		$	1.04		$	2.15		$	2.12

Diluted	$	1.08		$	1.02		$	2.11		$	2.09

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES	$	19,306		$	9,454

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities:
Held for investment		(1,375	)		(1,041	)
Available for sale		(141,850	)		(116,096	)
Maturities of securities:
Held for investment		5,966			11,591
Available for sale		117,760			57,355
Proceeds from sales and calls of securities:
Held for investment		791			649
Available for sale		1,465			84,404
Net increase in federal funds sold		(105,191	)		(97,000	)
Purchases of loans		(609	)		(13,063	)
Proceeds from sales of loans		61,460			100,866
Net other increase in loans		(80,770	)		(72,838	)
Purchases of premises and equipment		(4,216	)		(3,587	)
Proceeds from the sale of other real estate owned and repossessed assets		2,196			2,094
Other, net		848			581

Net cash used by investing activities		(143,525	)		(46,085	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand, transaction and savings deposits		122,871			145,216
Net decrease in certificates of deposits		(40,095	)		(71,560	)
Net increase in short-term borrowings		4,432			4,345
Net decrease in long-term borrowings		(2,386	)		(20,731	)
Issuance of junior subordinated debentures		26,804			—
Issuance of common stock		1,295			789
Acquisition of common stock		(2,055	)		(16,185	)
Cash dividends paid		(3,917	)		(3,433	)

Net cash provided by financing activities		106,949			38,441

Net (decrease) increase in cash and due from banks		(17,270	)		1,810
Cash and due from banks at the beginning of the period		159,128			161,105

Cash and due from banks at the end of the period	$	141,858		$	162,915

SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest	$	13,558		$	19,508

Cash paid during the period for income taxes	$	8,960		$	8,750

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

BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per share data)

(1) GENERAL

The accompanying consolidated financial statements include the accounts of BancFirst Corporation, Century Life Assurance Company, Council Oak Partners, LLC, and BancFirst and its subsidiaries (the “Company”). The operating subsidiaries of BancFirst are Council Oak Investment Corporation, Citibank Insurance Agency, Inc., BancFirst Agency, Inc., Lenders Collection Corporation, Express Financial Corporation, Mojave Asset Management Company, Desert Asset Management Company, Delamar Asset Management Limited Partnership and PremierSource LLC. 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 consolidated financial statements.

The unaudited interim financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2003, the date of the most recent annual report. Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes and the fair values of financial instruments. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

(2) STOCK-BASED COMPENSATION

The Company uses the intrinsic value method, as described in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations, for accounting for its stock-based compensation. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“FAS 123”), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123,” which, if fully adopted by the Company, would change the method the Company applies in recognizing the cost of these plans to the fair value method. Adoption of the cost recognition provisions of FAS 123 is optional and the Company has not adopted such provisions. However, pro forma disclosures as if the Company adopted the cost recognition provisions of FAS 123 in 1995 are required and are presented below.


	Three Months Ended June 30,								Six Months Ended June 30,
	2004				2003				2004				2003
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
APB 25 charge	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
FAS 123 charge		—		146		—		174		—		308		—		341
Net income		8,638		8,492		8,072		7,898		16,829		16,521		16,670		16,329
Net income per share:
Basic	$	1.10	$	1.08	$	1.04	$	1.01	$	2.15	$	2.11	$	2.12	$	2.08
Diluted		1.08		1.06		1.02		0.99		2.11		2.07		2.09		2.05

The effects of applying SFAS No. 123 to the pro forma disclosure are not indicative of future results. SFAS No. 123 does not apply to grants of options prior to 1995 and the Company anticipates making additional grants in the future.

(3) RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN 46”) which provides guidance for determining when an entity should consolidate another entity that meets the definition of a variable interest entity. Special purpose entities and other types of entities are assessed for consolidation under this new guidance. FIN 46 requires a variable interest entity to be consolidated if the company will absorb a majority of the expected losses, will receive a majority of the expected residual returns, or both. FIN 46 was effective immediately for interests in variable interest entities acquired after January 31, 2003. It applied in the first interim period after June 15, 2003 to interests in variable interest entities acquired before February 1, 2003. As of October 9, 2003, the FASB deferred compliance with FIN 46 from July 1, 2003 to the first period ending after December 15, 2003 for variable interest entities created prior to February 1, 2003. However, the Company adopted FIN 46 on July 1, 2003, as originally issued, and de-consolidated BFC Capital Trust I. In December 2003, the FASB issued a revision of FIN 46 (“Revised FIN 46”) that codified the proposed modifications and other decisions previously issued through certain FASB Staff Positions, made other revisions, and superceded the original FIN 46. The effect of this de-consolidation was to remove the $25,000 of 9.65% Capital Securities and the related interest expense from the Company’s consolidated financial statements, and instead report the $25,000 as part of Junior Subordinated Debentures issued by BancFirst Corporation to the Trust, and the related interest expense thereon. A potential result of the de-consolidation of the Trust could be that the 9.65% Capital Securities and the 7.20% Cumulative Trust Preferred Securities described in note (4) would no longer be included in the Company’s Tier 1 capital. The Federal Reserve Board has issued interim guidance that allows such securities to continue to qualify as Tier 1 capital while the issue of de-consolidation continues under review. In May 2004, the Federal Reserve Board requested public comment on a proposed rule that would retain trust preferred securities in Tier 1 capital, but with stricter limits.

In May 2003, the FASB issued FAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement is effective for all new and modified financial instruments beginning with the first interim period beginning after June 15, 2003. FAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be accounted for as equity and requires that those instruments be classified as liabilities, or assets in certain circumstances. The adoption of this new standard did not have a material effect on the Company’s consolidated financial statements.

In March 2004, the FASB ratified EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” (“EITF 03-1”) which provides guidance on recognizing other-than-temporary impairments on certain investments. The Issue is effective for other-than-temporary impairment evaluations for investments accounted for under FAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” as well as non-marketable equity securities accounted for under the cost method for reporting periods beginning after June 15, 2004. As of June 30, 2004, the adoption of this new standard was not expected to have a material effect on the Company’s consolidated financial statements.

(4) RECENT DEVELOPMENTS; MERGERS, ACQUISITIONS AND DISPOSALS

In January 2003, the Company repurchased 320,000 shares of its common stock for $14,400. The shares were repurchased through a market-maker in the Company’s stock and the repurchase was not a part of the Company’s ongoing Stock Repurchase Program.

In October 2003, the Company completed the acquisition of Lincoln National Bancorporation (“Lincoln”) of Oklahoma City, Oklahoma for cash of $16,949. Lincoln had consolidated total assets of approximately $107,673. As a result of the acquisition, Lincoln was merged into the Company, and Lincoln’s wholly-owned bank subsidiary, Lincoln National Bank, became a subsidiary of the Company and was merged into BancFirst in February 2004. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In November 2003, BancFirst completed the acquisition of the Hobart and Lone Wolf, Oklahoma branches of Gold Bank. As a result of the acquisition, BancFirst purchased approximately $16,256 of loans and other assets, and assumed approximately $40,465 of deposits, for a premium of approximately $2,731. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In January 2004, BancFirst Corporation established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. BancFirst Corporation owns all of the common securities of BFC II. In February 2004, BFC II issued $25,000 of aggregate liquidation amount of 7.20% Cumulative Trust Preferred Securities (the “Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $1,000 in Trust Preferred Securities through the execution of an over-allotment option. The proceeds from the sale of the Trust Preferred Securities and the common securities of BFC II were invested in $26,804 of 7.20% Junior Subordinated Debentures of BancFirst Corporation. Interest payments on the 7.20% Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the 7.20% Junior Subordinated Debentures is March 31, 2034, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Trust Preferred Securities represent an undivided interest in the 7.20% Junior Subordinated Debentures, are guaranteed by BancFirst Corporation, and currently qualify as Tier 1 regulatory capital but could potentially be excluded in the future as discussed in note (3). During any deferral period or during any event of default, BancFirst Corporation may not declare or pay any dividends on any of its capital stock.

(5) SECURITIES

The table below summarizes securities held for investment and securities available for sale.


	June 30,				December 31, 2003
	2004		2003		December 31, 2003
Held for investment at cost (market value; $34,236, $46,537 and $40,191, respectively)	$	33,084	$	43,876	$	38,465
Available for sale, at market value		537,339		486,768		526,270

Total	$	570,423	$	530,644	$	564,735

In June 2003, the Company sold $71,176 of available for sale securities and recognized a gain of $2,487. The sale was a part of a plan to adjust the Company’s interest rate sensitivity. The proceeds from this sale were reinvested in securities with shorter maturity dates. The table below summarizes the maturity of securities.


	June 30,				December 31, 2003
	2004		2003		December 31, 2003
Contractual maturity:
Within one year	$	73,369	$	162,397	$	151,919
After one year but within five years		448,528		334,499		363,300
After five years		32,619		20,878		35,163

Total debt securities		554,516		517,774		550,382
Equity securities		15,907		12,870		14,353

Total	$	570,423	$	530,644	$	564,735

At June 30, 2004, the Company held 103 securities available for sale that had unrealized losses. These securities had a market value totaling $189,505 and unrealized losses totaling $3,115. These unrealized losses occurred due to increases in interest rates and spreads and not as a result of a decline in credit quality. The Company has both the intent and ability to hold these securities until the unrealized losses are recovered.

(6) LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:


	June 30,								December 31
	2004				2003				2003
	Amount		Percent		Amount		Percent		Amount		Percent
Commercial and industrial	$	354,119	18.03	%	$	365,335	20.33	%	$	409,910	21.05	%
Agriculture		69,021	3.51			76,647	4.26			85,094	4.37
State and political subdivisions:
Taxable		3,123	0.16			131	0.01			221	0.01
Tax-exempt		16,904	0.86			19,645	1.09			20,560	1.06
Real Estate:
Construction		145,910	7.43			148,000	8.23			153,755	7.90
Farmland		82,742	4.21			68,326	3.80			83,843	4.31
One to four family residences		474,492	24.16			423,157	23.55			441,010	22.65
Multifamily residential properties		10,332	0.53			15,129	0.84			10,316	0.53
Commercial		506,026	25.77			400,630	22.29			455,961	23.41
Consumer		276,419	14.08			254,148	14.14			265,437	13.63
Other		24,800	1.26			26,216	1.46			21,116	1.08

Total loans	$	1,963,888	100.00	%	$	1,797,364	100.00	%	$	1,947,223	100.00	%

Loans held for sale (included above)	$	6,575			$	17,069			$	4,115

The Company’s loans are mostly to customers within Oklahoma and over half of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral. The amount of estimated loss due to credit risk in the Company’s loan portfolio is provided for in the allowance for loan losses. The amount of the allowance required to provide for all existing losses in the loan portfolio is an estimate based upon evaluations of loans, appraisals of collateral and other estimates which are subject to rapid change due to changing economic conditions and the economic prospects of borrowers. It is reasonably possible that a material change could occur in the estimated allowance for loan losses in the near term.

Changes in the allowance for loan losses are summarized as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Balance at beginning of period	$	26,403		$	24,694		$	26,148		$	24,367

Charge-offs		(1,071	)		(1,014	)		(1,770	)		(1,770	)
Recoveries		388			262			622			562

Net charge-offs		(683	)		(752	)		(1,148	)		(1,208	)

Provisions charged to operations		201			1,062			921			1,845

Balance at end of period	$	25,921		$	25,004		$	25,921		$	25,004

The net charge-offs by category are summarized as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Commercial, financial and other	$	437	$	316	$	555	$	364
Real estate – construction		3		6		4		15
Real estate – mortgage		70		135		138		367
Consumer		173		295		451		462

Total	$	683	$	752	$	1,148	$	1,208

(7) NONPERFORMING AND RESTRUCTURED ASSETS

Below is a summary of nonperforming and restructured assets:


	June 30,						December 31,
	2004			2003			2003
Past due over 90 days and still accruing	$	2,398		$	1,521		$	2,674
Nonaccrual		8,368			13,756			13,381
Restructured		433			503			415

Total nonperforming and restructured loans		11,199			15,780			16,470
Other real estate owned and repossessed assets		3,675			2,934			3,939

Total nonperforming and restructured assets	$	14,874		$	18,714		$	20,409

Nonperforming and restructured loans to total loans		0.57	%		0.88	%		0.85	%

Nonperforming and restructured assets to total assets		0.49	%		0.66	%		0.70	%

(8) INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets:


	June 30,								December 31,
	2004				2003				2003
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Core deposit intangibles	$	7,981	$	3,609	$	4,552	$	3,366	$	7,981	$	3,255
Trademarks		20		20		20		19		20		20

Total	$	8,001	$	3,629	$	4,572	$	3,385	$	8,001	$	3,275

Amortization of intangible assets and estimated amortization of intangible assets are as follows:


Amortization:
Three months ended June 30, 2004	$	169
Three months ended June 30, 2003		137
Six months ended June 30, 2004		354
Six months ended June 30, 2003		284
Year ended December 31, 2003		580
Estimated Amortization:
Year ended December 31,
2004	$	694
2005		676
2006		638
2007		485
2008		384

The following is a summary of goodwill by business segment:


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support		Eliminations			Consolidated
Three Months Ended June 30, 2004
Balance at beginning of period	$	13,139	$	14,212	$	—	$	1,713	$	(1,183	)	$	27,881
Acquisitions		65		—		—		—		—			65
Branch closing		—		—		—		—		—			—

Balance at end of period	$	13,204	$	14,212	$	—	$	1,713	$	(1,183	)	$	27,946

Three Months Ended June 30, 2003
Balance at beginning and end of period	$	7,144	$	12,561	$	—	$	1,713	$	(1,183	)	$	20,325

Six Months Ended June 30, 2004
Balance at beginning of period	$	12,993	$	14,088	$	—	$	1,713	$	(1,183	)	$	27,611
Acquisitions		211		124		—		—		—			335
Branch closing		—		—		—		—		—			—

Balance at end of period	$	13,204	$	14,212	$	—	$	1,713	$	(1,183	)	$	27,946

Six Months Ended June 30, 2003
Balance at beginning and end of period	$	7,144	$	12,561	$	—	$	1,713	$	(1,183	)	$	20,325

(9) LONG-TERM BORROWINGS

In June 2003, the Company retired $25,100 of Federal Home Loan Bank advances under its line of credit, and recognized a loss on early extinguishment of debt of $2,429. This early retirement of the advances was part of a plan to adjust the Company’s interest rate sensitivity. These retired advances had fixed rates from 3.47% to 7.87% and maturities from 2008 to 2017.

(10) CAPITAL

The Company is subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System. These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s assets, liabilities, and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s consolidated financial statements. The required minimums and the Company’s respective ratios are shown below.


	Minimum Required		June 30,						December 31, 2003
	Minimum Required		2004			2003			December 31, 2003
Tier 1 capital			$	278,551		$	239,316		$	240,532
Total capital			$	304,620		$	264,406		$	266,765
Risk-adjusted assets			$	2,194,022		$	2,025,754		$	2,136,970
Leverage ratio	3.00	%		9.28	%		8.47	%		8.33	%
Tier 1 capital ratio	4.00	%		12.70	%		11.81	%		11.26	%
Total capital ratio	8.00	%		13.88	%		13.05	%		12.48	%

To be “well capitalized” under federal bank regulatory agency definitions, a depository institution must have a Tier 1 Ratio of at least 6%, a combined Tier 1 and Tier 2 ratio of at least 10%, and a leverage ratio of at least 5%. As of June 30, 2004 and 2003, and December 31, 2003, the Company was considered to be “well capitalized”. There are no conditions or events since the most recent notification of the Company’s capital category that management believes would change its category.

(11) STOCK REPURCHASE PLAN

In November 1999, the Company adopted a new Stock Repurchase Program (the “SRP”) authorizing management to repurchase up to 300,000 shares of the Company’s common stock. The SRP was amended in May 2001 to increase the

shares authorized to be purchased by 277,916 shares and was amended again in August 2002 to increase the number of shares authorized to be purchased by 182,265 shares. The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options, and to provide liquidity for shareholders wishing to sell their stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and must be approved by the Company’s Executive Committee. At June 30, 2004 there were 213,126 shares remaining that could be repurchased under the SRP. Below is a summary of the shares repurchased under the program.


	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2003		2004		2003
Number of shares repurchased		36,500		29,000		36,500		39,200
Average price of shares repurchased	$	56.57	$	45.68	$	56.57	$	45.54

(12) COMPREHENSIVE INCOME

The only component of comprehensive income reported by the Company is the unrealized gain or loss on securities available for sale. The amount of this unrealized gain or loss, net of tax, has been presented in the statement of income for each period as a component of other comprehensive income. Below is a summary of the tax effects of this unrealized gain or loss.


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Unrealized gain (loss) during the period:
Before-tax amount	$	(13,232	)	$	3,849		$	(10,444	)	$	3,033
Tax (expense) benefit		4,796			(1,320	)		3,783			(1,067	)

Net-of-tax amount	$	(8,436	)	$	2,529		$	(6,661	)	$	1,966

The amount of unrealized gain or loss included in accumulated other comprehensive income is summarized below.


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Unrealized gain (loss) on securities:
Beginning balance	$	11,612		$	14,936		$	9,837		$	15,899
Current period change		(8,436	)		2,529			(6,661	)		1,966
Reclassification adjustment for (gains) losses included in net income		96			(1,601	)		96			(2,001	)

Ending balance	$	3,272		$	15,864		$	3,272		$	15,864

(13) NET INCOME PER COMMON SHARE

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


	Income (Numerator)		Shares (Denominator)	Per Share Amount
Three Months Ended June 30, 2004
Basic
Income available to common stockholders	$	8,638	7,834,040	$	1.10

Effect of stock options		—	144,989

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	8,638	7,979,029	$	1.08

Three Months Ended June 30, 2003
Basic
Income available to common stockholders	$	8,072	7,796,999	$	1.04

Effect of stock options		—	138,550

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	8,072	7,935,549	$	1.02

Six Months Ended June 30, 2004
Basic
Income available to common stockholders	$	16,829	7,829,785	$	2.15

Effect of stock options		—	148,847

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	16,829	7,978,632	$	2.11

Six Months Ended June 30, 2003
Basic
Income available to common stockholders	$	16,670	7,856,613	$	2.12

Effect of stock options		—	125,620

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	16,670	7,982,233	$	2.09

Below is the number and average exercise prices of options that were excluded from the computation of diluted net income per share for each period because the options’ exercise prices were greater than the average market price of the common shares.


	Shares	Average Exercise Price
Three Months Ended June 30, 2004	—	$	—
Three Months Ended June 30, 2003	77	$	51.86
Six Months Ended June 30, 2004	—	$	—
Six Months Ended June 30, 2003	16,026	$	50.00

(14) SEGMENT INFORMATION

The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The four principal business units are metropolitan banks, community banks, other financial services, and executive, operations and support. Metropolitan and community banks offer traditional banking products such as commercial and retail lending, and a full line of deposit accounts. Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. Community banks consist of banking locations in communities throughout Oklahoma. Other financial services are specialty product business units including guaranteed small business lending, guaranteed student lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units. The results of operations and selected financial information for the four business units are as follows:


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support			Elimin- ations			Consol- idated
Three Months Ended:
June 30, 2004
Net interest income (expense)	$	9,193	$	18,522	$	1,651	$	(1,035	)	$	—		$	28,331
Noninterest income		2,649		5,877		3,354		12,015			(11,153	)		12,742
Income before taxes		4,793		11,328		1,009		7,356			(11,171	)		13,315
June 30, 2003
Net interest income (expense)	$	7,982	$	20,781	$	1,784	$	(3,510	)	$	—		$	27,037
Noninterest income		2,113		5,804		3,249		16,932			(14,122	)		13,976
Income before taxes		4,729		12,633		1,577		7,762			(14,113	)		12,588

Six Months Ended:
June 30, 2004
Net interest income (expense)	$	18,121	$	36,994	$	3,018	$	(1,882	)	$	—		$	56,251
Noninterest income		5,224		11,477		5,973		22,871			(21,101	)		24,444
Income before taxes		9,280		22,066		1,891		13,933			(21,144	)		26,026
June 30, 2003
Net interest income (expense)	$	15,287	$	39,168	$	3,417	$	(4,095	)	$	—		$	53,777
Noninterest income		4,171		11,320		6,439		32,865			(29,039	)		25,756
Income before taxes		8,332		24,332		3,173		18,990			(29,091	)		25,736

Total Assets:
June 30, 2004	$	1,132,525	$	1,862,399	$	146,535	$	379,579		$	(486,255	)	$	3,034,783
June 30, 2003	$	969,277	$	1,809,400	$	161,814	$	567,703		$	(659,862	)	$	2,848,332

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 revenues related to other financial services are allocated to the banks whose customers receive the services and, therefor, are not reflected in the income for other financial services. 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.

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

BANCFIRST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY

Net income for the second quarter of 2004 was $8.64 million, compared to $8.07 million for the second quarter of 2003. Diluted net income per share was $1.08, compared to $1.02 for the second quarter of 2003. For the first six months of 2004, net income was $16.8 million, compared to $16.7 million for the first six months of 2003. Diluted net income per share for the first six months was $2.11, compared to $2.09 for the first six months of 2003.

Total assets at June 30, 2004 increased to $3.03 billion, up $113 million from December 31, 2003 and up $186 million from June 30, 2003. Stockholders’ equity was $261 million at June 30, 2004, up $5.59 million from December 31, 2003 and up $11.6 million compared to June 30, 2003.

In October 2003, BancFirst Corporation completed the acquisition of Lincoln National Bancorporation (“Lincoln”) of Oklahoma City, Oklahoma for cash of $16.9 million. Lincoln had consolidated total assets of approximately $108 million. As a result of the acquisition, Lincoln was merged into BancFirst Corporation, and Lincoln’s wholly-owned bank subsidiary, Lincoln National Bank, became a subsidiary of BancFirst Corporation and was merged into BancFirst in February 2004. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In November 2003, BancFirst completed the acquisition of the Hobart and Lone Wolf, Oklahoma branches of Gold Bank. As a result of the acquisition, BancFirst purchased approximately $16.3 million of loans and other assets, and assumed approximately $40.5 million of deposits, for a premium of approximately $2.73 million. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

RESULTS OF OPERATIONS

Second Quarter

Net interest income for the second quarter of 2004 was $28.3 million, up $1.29 million from the second quarter of 2003. The net interest margin decreased to 4.12% from 4.21% for the second quarter of 2003. An increase in earning assets between the second quarter of 2004 and the second quarter of 2003, primarily in loans, produced a positive volume variance that was offset by a negative rate variance. In a low rate environment, the benefit of the Company’s noninterest-bearing funds is reduced, resulting in a lower net interest margin. Assuming no change in interest rates, or in the volume or mix of the Company’s loans and deposits, the Company’s net interest income would reasonably be expected to decline.

The Company provided $201,000 for loan losses in the second quarter of 2004, compared to $1.06 million for the same period of 2003. The decrease in loan losses resulted from a decrease in nonperforming loans. The Company’s nonperforming loans decreased $4.58 million from a year ago to $11.2 million at June 30, 2004. The percentage coverage of loan loss reserve to total nonperforming loans increased from 158.45% at June 30, 2003 to 231.46% at June 30, 2004. Net loan charge-offs were $683,000 for the second quarter of 2004, compared to $752,000 for the second quarter of 2003. The net charge-offs represent an annualized rate of 0.14% of average total loans for the second quarter of 2004 versus 0.17% for the second quarter of 2003.

Noninterest income, excluding securities transactions, increased $1.38 million compared to the second quarter of 2003 due to an increase in service charges on deposits, cash management and electronic banking services, and sales of insurance products. There was a loss of $148,000 on securities transactions in the second quarter of 2004, while gains of $2.46 million were recognized in the second quarter of 2003. Noninterest expense increased $194,000 compared to the second quarter of 2003. In addition, during the second quarter of 2003, a $2.43 million loss on early extinguishment of debt was recognized. Excluding this loss, the increase in noninterest expense compared to the second quarter of 2003 was $2.62 million. The majority of this increase was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and also annual salaries increases effective in January 2004. Income tax expense increased $161,000 compared to the second quarter of 2003. The effective tax rate on income before taxes was 35.13%, compared to 35.88% for the second quarter of 2003.

Year-To-Date

Net interest income for the first six months of 2004 was $56.3 million, up $2.47 million from the first six months of 2003. The net interest margin decreased to 4.16% for the first six months of 2004 compared to 4.27% for the same period of 2003. An increase in earning assets between the first six months of 2004 and the first six months of 2003, primarily in loans, produced a positive volume variance that was offset by a negative rate variance. In a low rate environment, the benefit of the Company’s noninterest-bearing funds is reduced, resulting in a lower net interest margin. Assuming no change in interest rates, or in the volume or mix of the Company’s loans and deposits, the Company’s net interest income would reasonably be expected to decline.

The Company provided $921,000 for loan losses in the first six months of 2004, compared to $1.85 million for the same period of 2003. The decrease in loan losses resulted from a decrease in nonperforming loans. The Company’s nonperforming loans decreased $4.58 million from a year ago to $11.2 million at June 30, 2004. The percentage coverage of loan loss reserve to total nonperforming loans increased from 158.45% at June 30, 2003 to 231.46% at June 30, 2004. Net loan charge-offs were $1.15 million for the first six months of 2004, compared to $1.21 million for the first six months of 2003. The net charge-offs represent an annualized rate of 0.12% of average total loans for the first six months of 2004 versus 0.13% for the first six months of 2003.

Noninterest income, excluding securities transactions, for the first six months of 2004 increased $1.92 million compared to the same period in 2003 due to an increase in service charges on deposits, cash management and electronic banking services, sales of insurance products and a gain of $421,000 on the sale of a minority interest in a community bank. There was a loss of $148,000 on securities transactions in the first six months of 2004, while gains of $3.08 million were recognized in the first six months of 2003. Noninterest expense increased $1.80 million compared to the first six months of 2003. During the first six months of 2003, a $2.43 million loss on early extinguishment of debt was recognized. Excluding this loss, the increase in noninterest expense compared to the first six months of 2003 was $4.23 million. The majority of this increase was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and also annual salaries increases effective in January 2004. Income tax expense increased $131,000 compared to the first six months of 2003. The effective tax rate on income before taxes was 35.34%, compared to 35.23% for the first six months of 2003.

FINANCIAL POSITION

The aggregate of cash and due from banks, interest-bearing deposits with banks, and federal funds sold increased $87.9 million from December 31, 2003, and decreased $41.1 million from June 30, 2003. The increase from December 31, 2003 was mainly from an increases in deposits, while the decrease from June 30, 2003 resulted from growth in loans and securities.

Total securities increased $5.69 million compared to December 31, 2003 and $39.8 million compared to June 30, 2003. The size of the Company’s securities portfolio is a function of liquidity management and excess funds available for investment. The Company has maintained a very liquid securities portfolio to provide funds for loan growth. The net unrealized gain on securities available for sale, before taxes, was $4.64 million at the end of the second quarter of 2004, compared to an unrealized gain of $15.0 million at December 31, 2003 and a gain of $23.7 million at June 30, 2003. The average taxable equivalent yield on the securities portfolio for the second quarter of 2004 decreased to 4.03% from 4.61% for the same quarter of 2003.

Total loans increased $16.7 million from December 31, 2003, and increased $167 million from June 30, 2003. The increase compared to the second quarter of 2003 was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and internal growth. The allowance for loan losses decreased $227,000 from year-end 2003 and increased $917,000 from the second quarter of 2003. The allowance as a percentage of total loans was 1.32%, 1.34% and 1.39% at June 30, 2004, December 31, 2003 and June 30, 2003, respectively. The allowance to nonperforming and restructured loans at the same dates was 231.46%, 158.76% and 158.45%, respectively.

Nonperforming and restructured loans totaled $11.2 million at June 30, 2004, compared to $16.5 million at December 31, 2003 and $15.8 million at June 30, 2003. The ratio of nonperforming and restructured loans to total loans for the same periods was 0.57%, 0.85% and 0.88%, respectively. The level of nonperforming loans and loan losses may rise over time as a result of economic and credit cycles.

Total deposits increased $82.8 million compared to December 31, 2003, and $166 million compared to June 30, 2003, due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and internal growth. The Company’s deposit base continues to be comprised substantially of core deposits, with large denomination certificates of deposit being only 8.34% of total deposits at June 30, 2004, compared to 8.96% at December 31, 2003 and 9.00% at June 30, 2003.

Short-term borrowings increased $4.43 million from December 31, 2003, and decreased $7.75 million from June 30, 2003. Fluctuations in short-term borrowings are a function of federal funds purchased from correspondent banks, customer demand for repurchase agreements and liquidity needs of the bank.

Long-term borrowings decreased $2.39 million from year-end 2003 and $4.68 million from the second quarter of 2003. The Company uses these borrowings primarily to match-fund long-term fixed-rate loans.

Junior subordinated debentures increased $26.8 million in the first six months of 2004 due to the issuance of the 7.20% Junior Subordinated Debentures to BFC Capital Trust II.

Stockholders’ equity increased $5.59 million from year-end 2003 and $11.6 million from the second quarter of 2003, due to accumulated earnings offset by a decrease in unrealized gains in securities. Average stockholders’ equity to average assets for the second quarter of 2004 was 8.82%, compared to 8.80% for the second quarter of 2003. The Company’s leverage ratio and total risk-based capital ratio were 9.28% and 13.88%, respectively, at June 30, 2004, well in excess of the regulatory minimums.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See note (3) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

SEGMENT INFORMATION

See note (14) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.

FORWARD LOOKING STATEMENTS

The Company may make forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. 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

SELECTED CONSOLIDATED FINANCIAL DATA

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Per Common Share Data
Net income – basic	$	1.10		$	1.04		$	2.15		$	2.12
Net income – diluted		1.08			1.02			2.11			2.09
Cash dividends		0.25			0.22			0.50			0.44

Performance Data
Return on average assets		1.13	%		1.13	%		1.12	%		1.19	%
Return on average stockholders’ equity		13.21			13.12			12.69			13.52
Cash dividend payout ratio		22.73			21.15			23.26			20.75
Net interest spread		3.75			3.78			3.80			3.81
Net interest margin		4.12			4.21			4.16			4.27
Efficiency ratio		67.09			66.72			66.61			65.32


	June 30,						December 31, 2003
	2004			2003			December 31, 2003
Balance Sheet Data
Book value per share	$	33.35		$	31.95		$	32.64
Tangible book value per share		29.22			29.21			28.51
Average loans to deposits (year-to-date)		73.13	%		73.68	%		73.33	%
Average earning assets to total assets (year-to-date)		90.95			91.28			91.24
Average stockholders’ equity to average assets (year-to-date)		8.82			8.80			8.81

Asset Quality Ratios
Nonperforming and restructured loans to total loans		0.57	%		0.88	%		0.85	%
Nonperforming and restructured assets to total assets		0.49			0.66			0.70
Allowance for loan losses to total loans		1.32			1.39			1.34
Allowance for loan losses to nonperforming and restructured loans		231.46			158.45			158.76

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)


	Three Months Ended June 30,
	2004								2003
	Average Balance			Interest Income/ Expense		Average Yield/ Rate			Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	1,942,465		$	28,914	$	5.99	%	$	1,801,221		$	29,068	6.47	%
Securities - taxable		540,034			5,213		3.88			500,731			5,573	4.46
Securities - tax exempt		35,955			566		6.33			37,494			611	6.53
Federal funds sold		276,935			695		1.01			270,035			804	1.19

Total earning assets		2,795,389			35,388		5.09			2,609,481			36,056	5.54


Nonearning assets:
Cash and due from banks		124,410								118,995
Interest receivable and other assets		167,581								150,245
Allowance for loan losses		(26,151	)							(24,574	)

Total nonearning assets		265,840								244,666

Total assets	$	3,061,229							$	2,854,147

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	433,345			301		0.28	%	$	380,701			424	0.45	%
Savings deposits		780,607			2,076		1.07			731,991			2,660	1.46
Time deposits		718,747			3,071		1.72			773,494			4,442	2.30
Short-term borrowings		24,291			45		0.75			29,974			89	1.19
Long-term borrowings		8,968			141		6.31			30,301			418	5.53
Junior subordinated debentures		51,803			1,103		8.56			25,000			611	9.80

Total interest-bearing liabilities		2,017,761			6,737		1.34			1,971,461			8,643	1.76

Interest-free funds:
Noninterest-bearing deposits		756,754								605,356
Interest payable and other liabilities		23,705								30,476
Stockholders’ equity		263,009								246,854

Total interest free funds		1,043,468								882,686

Total liabilities and stockholders’ equity	$	3,061,229							$	2,854,147

Net interest income				$	28,651							$	27,413

Net interest spread							3.75	%						3.78	%

Net interest margin							4.12	%						4.21	%

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

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)


	Six Months Ended June 30,
	2004								2003
	Average Balance			Interest Income/ Expense		Average Yield/ Rate			Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	1,939,603		$	57,593	$	5.97	%	$	1,814,311		$	58,409	6.49	%
Securities - taxable		533,780			10,295		3.88			511,728			11,719	4.62
Securities - tax exempt		36,735			1,167		6.39			38,691			1,274	6.64
Federal funds sold		240,140			1,202		1.01			213,585			1,267	1.20

Total earning assets		2,750,258			70,257		5.14			2,578,315			72,669	5.68

Nonearning assets:
Cash and due from banks		125,753								121,343
Interest receivable and other assets		174,026								149,392
Allowance for loan losses		(26,159	)							(24,521	)

Total nonearning assets		273,620								246,214

Total assets	$	3,023,878							$	2,824,529

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	435,039			617		0.29	%	$	377,612			933	0.50	%
Savings deposits		753,735			3,963		1.06			696,889			5,395	1.56
Time deposits		738,251			6,439		1.75			790,424			9,529	2.43
Short-term borrowings		26,796			125		0.94			25,954			157	1.22
Long-term borrowings		9,506			298		6.30			31,660			887	5.65
Junior subordinated debentures		43,229			1,904		8.86			25,000			1,223	9.87

Total interest-bearing liabilities		2,006,556			13,346		1.34			1,947,539			18,124	1.87

Interest-free funds:
Noninterest-bearing deposits		725,334								597,403
Interest payable and other liabilities		25,369								30,954
Stockholders’ equity		266,619								248,633

Total interest free funds		1,017,322								876,990

Total liabilities and stockholders’ equity	$	3,023,878							$	2,824,529

Net interest income				$	56,911							$	54,545

Net interest spread							3.80	%						3.81	%

Net interest margin							4.16	%						4.27	%

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes in the Registrant’s disclosures regarding market risk since December 31, 2003, the date of its annual report to stockholders.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer, Chief Financial Officer and Disclosure Committee, which includes the Company’s Chief Risk Officer, Chief Asset Quality Officer, Chief Internal Auditor, Holding Company Controller, Bank Controller and General Counsel, have evaluated the Company’s disclosure controls and procedures as of a date within 90 days of the filing date of this report. Based on their evaluation they concluded that the disclosure controls and procedures of the Company are adequate 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. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

PART II – OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

On May 27, 2004, the Registrant amended its Amended and Restated Certificate of Incorporation to increase the number of shares of common stock that the Registrant has the authority to issue from 15,000,000 shares to 20,000,000 shares.

There were no equity securities of the Registrant sold without registration during the quarter covered by this report.

Stock repurchases by the Registrant during the quarter were as follows:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Month #1 (beginning April 1, 2004 and ending April 30, 2004)	—		—	—	249,626

Month #2 (beginning May 1, 2004 and ending May 31, 2004)	10,000	$	55.50	10,000	239,626

Month #3 (beginning June 1, 2004 and ending June 30, 2004)	26,500	$	56.97	26,500	213,126

Total	36,500	$	56.57	36,500	213,126

(1)

The Company’s Stock Repurchase Program was originally announced on November 18, 1999. The total number of shares authorized for repurchase under the Stock Repurchase Program is 760,181 shares. The Stock Repurchase Program will remain effective until the number of shares authorized is repurchased or until the board of directors terminates the program.

Item 4. Submission of Matters to a Vote of Security Holders.

At the Company’s Annual Meeting of Stockholders held on May 27, 2004, the following matters were voted upon, with the votes indicated below:


	Number of Shares
Description of Proposal	Voted for	Withheld		Broker non-votes

Proposal No. 1 -Election of Directors

*Class III Directors*
Marion C. Bauman	6,776,998	144		292,347
William H. Crawford	6,777,043	99		292,347
K. Gordon Greer	6,764,739	12,403		292,347
Dr. Donald B. Halverstadt	6,776,998	144		292,347
William O. Johnstone	6,683,798	93,343		292,347
Melvin Moran	6,660,658	116,484		292,347
David E. Rainbolt	6,726,084	51,058		292,347
*Class II Director*
G. Rainey Williams, Jr.	6,777,043	99		292,347

	Number of Shares
	Voted for	Voted against	Abstained	Broker non-votes
Proposal No. 2- To amend the Company’s certificate of incorporation	6,690,581	52,448	34,112	292,347
Proposal No. 3- To amend the Company’s stock option plan	6,262,246	227,520	35,102	292,347
Proposal No. 4- Ratification of Ernst & Young as independent auditor	6,771,271	672	5,298	292,347

Item 6. Exhibits and Reports on Form 8-K.

(a)

Exhibits


Exhibit Number		Exhibit
3.1		Second Amended and Restated Certificate of Incorporation (filed as Exhibit 1 to the Company’s Form 8-A/A filed July 23, 1998 and incorporated herein by reference).

3.2		Certificate of Designations of Preferred Stock (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference).

3.3		Amended By-Laws (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992 and incorporated herein by reference).

3.4		Resolution of the Board of Directors amending Section XXVII of the Company’s By-Laws (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

3.5*		Amendment to the Second Amended and Restated Certificate of Incorporation.

4.1		Instruments defining the rights of securities holders (see Exhibits 3.1, 3.2, 3.3 and 3.4 above).

4.2		Amended and Restated Declaration of Trust of BFC Capital Trust I dated as of February 4, 1997 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference).

4.3		Form of 9.65% Series B Cumulative Trust Preferred Security Certificates for BFC Capital Trust I (included as Exhibit D to Exhibit 4.2).

4.4		Indenture dated as of February 4, 1997, relating to the 9.65% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust I (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference).

4.5		Form of Certificate of 9.65% Series B Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (included as Exhibit A to Exhibit 4.4).

4.6		Form of Series B Guarantee of BancFirst Corporation relating to the 9.65% Series B Cumulative Trust Preferred Securities of BFC Capital Trust I (filed as Exhibit 4.7 to the Company’s registration statement on Form S-4, File No. 333-25599, and incorporated herein by reference).

4.7		Amended and Restated Trust Agreement relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.8		First Amendment to Amended and Restated Trust Agreement (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated March 24, 2004 and incorporated herein by reference).

4.9		Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (included as Exhibit D to Exhibit 4.7).


Exhibit Number		Exhibit
4.10		Indenture relating to the 7.20% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust II (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.11		Guarantee of BancFirst Corporation relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.12		Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including as Exhibit A the form of Certificate of Designations of the Company setting forth the terms of the Preferred Stock, as Exhibit B the form of Right Certificate and as Exhibit C the form of Summary of Rights Agreement (filed as Exhibit 1 to the Company’s Current Report on Form 8-K dated February 25, 1999 and incorporated herein by reference).

31.1*		CEO’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31.2*		CFO’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

32.1*		CEO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		CFO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith.

(b)	A report on Form 8-K dated July 23, 2004 was filed by the Company to file its press release dated July 22, 2004 announcing the results of its operations for the second quarter ended June 30, 2004.

SIGNATURES

Pursuant to the requirements of the Securities and 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 August 9, 2004		/s/ Randy P. Foraker
		(Signature)
		Randy P. Foraker
		Executive Vice President
		Chief Risk Officer
		Treasurer/Assistant Secretary
		(Principal Accounting Officer)

Exhibit 3.5

CERTIFICATE OF AMENDMENT

OF THE

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

BANCFIRST CORPORATION

Adopted in accordance with the provisions of Section 1077

of the General Corporation Act of the State of Oklahoma

TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA:

BANCFIRST CORPORATION , a corporation organized and existing under the laws of the State of Oklahoma (the “Corporation”), for the purpose of amending its Second Amended and Restated Certificate of Incorporation, does hereby certify:

FIRST: That the name of this Corporation is BancFirst Corporation, and the name under which it was originally incorporated was United Community Corporation.

SECOND: That the date of filing of this Corporation’s original Certificate of Incorporation with the Secretary of State of the State of Oklahoma was July 12, 1984. The date of filing of this Corporation’s Second Amended and Restated Certificate of Amendment with the Secretary of State of the State of Oklahoma was July 24, 1998.

THIRD: That the Second Amended and Restated Certificate of Incorporation of the Corporation, as subsequently amended by a Certificate of Merger filed with the Secretary of State of the State of Oklahoma on September 30, 1998, and a Certificate of Designation filed with the Secretary of State of the State of Oklahoma on March 11, 1999, is hereby further amended by deleting Section A of Article 5 and inserting a new Section A of Article 5 to read in its entirety as follows:

ARTICLE 5

A. The aggregate number of shares of all classes which the Corporation shall have authority to allot is 30,900,000. The designation of each class, the number of shares of each class, the par value of each class and the total authorized capital of the Corporation are as follows:


Class	Number of Shares	Par Value		Total Par Value Authorized
Senior Preferred Stock	10,000,000	$	1.00	$	10,000,000
10% Cumulative Preferred Stock	900,000	$	5.00		4,500,000
Common Stock	20,000,000	$	1.00		20,000,000

Total	30,900,000			$	34,500,000

FOURTH: That such amendment was duly adopted in accordance with Section 1077 of the Oklahoma General Corporation Act (the “Act”), after being proposed by the directors of the Corporation and adopted by its shareholders in the manner and by the vote prescribed by the Act.

FIFTH: That this amendment be effective upon filing.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its President and attested to by its Secretary this 15 ^th day of June, 2004.


BANCFIRST CORPORATION

By:		/s/ David E. Rainbolt
		David E. Rainbolt, President

ATTEST:

/s/ Joe T. Shockley, Jr.

Joe T. Shockley, Jr., Secretary

Exhibit 31.1

CEO’S CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

I, David E. Rainbolt, certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2004 of BancFirst Corporation;

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15 (e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls 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 the 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable 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.


Date: August 9, 2004		/s/ David E. Rainbolt
		(Signature)
		David E. Rainbolt
		President and Chief Executive Officer

Exhibit 31.2

CFO’S CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)

I, Joe T. Shockley, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2004 of BancFirst Corporation;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

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.


Date: August 9, 2004		/s/ Joe T. Shockley, Jr.
		(Signature)
		Joe T. Shockley, Jr.
		Executive Vice President and Chief Financial Officer

Exhibit 32.1

CEO’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of BancFirst Corporation (the “Company”) for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the “Report”), I, David E. Rainbolt, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David E. Rainbolt

David E. Rainbolt

President and Chief Executive Officer

August 9, 2004

Exhibit 32.2

CFO’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of BancFirst Corporation (the “Company”) for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the “Report”), I, Joe T. Shockley, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joe T. Shockley, Jr.

Joe T. Shockley, Jr.

Executive Vice President and Chief Financial Officer

August 9, 2004