UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2019
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 0-14384
BancFirst Corporation
(Exact name of registrant as specified in charter)
|
Oklahoma |
|
73-1221379 |
|
(State or other Jurisdiction of |
|
(I.R.S. Employer |
|
incorporation or organization) |
|
Identification No.) |
|
101 N. Broadway, Oklahoma City, Oklahoma |
|
73102-8405 |
|
(Address of principal executive offices) |
|
(Zip Code) |
(405) 270-1086
(Registrant’s telephone number, including area code)
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 ☒ No ☐.
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). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
☒ |
Accelerated filer |
☐ |
|
|
|
|
|
|
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
|
|
|
|
|
Emerging growth company |
☐ |
|
|
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 ☒
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
Common Stock, $1.00 Par Value Per Share |
|
BANF |
|
NASDAQ Global Select Market System |
As of July 31, 2019 there were 32,642,018 shares of the registrant’s Common Stock outstanding.
BancFirst Corporation
Quarterly Report on Form 10-Q
June 30, 2019
Table of Contents
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Item |
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Page |
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PART I – Financial Information |
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1. |
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2 |
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2 |
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3 |
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4 |
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5 |
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6 |
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2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
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3. |
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36 |
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4. |
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36 |
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PART II – Other Information |
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1. |
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37 |
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1A. |
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37 |
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2. |
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37 |
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3. |
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37 |
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4. |
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37 |
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5. |
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37 |
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6. |
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38 |
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40 |
||
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
(unaudited) |
|
|
(see Note 1) |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
185,440 |
|
|
$ |
228,431 |
|
|
Interest-bearing deposits with banks |
|
|
1,518,998 |
|
|
|
1,195,824 |
|
|
Securities held for investment (fair value: $2,003 and $1,433, respectively) |
|
|
1,997 |
|
|
|
1,428 |
|
|
Securities available for sale at fair value |
|
|
423,157 |
|
|
|
770,704 |
|
|
Loans held for sale |
|
|
10,899 |
|
|
|
8,174 |
|
|
Loans (net of unearned interest) |
|
|
5,094,403 |
|
|
|
4,975,976 |
|
|
Allowance for loan losses |
|
|
(55,108 |
) |
|
|
(51,389 |
) |
|
Loans, net of allowance for loan losses |
|
|
5,039,295 |
|
|
|
4,924,587 |
|
|
Premises and equipment, net |
|
|
180,506 |
|
|
|
174,362 |
|
|
Other real estate owned |
|
|
6,787 |
|
|
|
6,690 |
|
|
Intangible assets, net |
|
|
14,936 |
|
|
|
16,470 |
|
|
Goodwill |
|
|
79,749 |
|
|
|
79,749 |
|
|
Accrued interest receivable and other assets |
|
|
180,257 |
|
|
|
167,839 |
|
|
Total assets |
|
$ |
7,642,021 |
|
|
$ |
7,574,258 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Noninterest-bearing |
|
$ |
2,634,582 |
|
|
$ |
2,613,876 |
|
|
Interest-bearing |
|
|
3,979,031 |
|
|
|
3,991,619 |
|
|
Total deposits |
|
|
6,613,613 |
|
|
|
6,605,495 |
|
|
Short-term borrowings |
|
|
1,000 |
|
|
|
1,675 |
|
|
Accrued interest payable and other liabilities |
|
|
44,224 |
|
|
|
37,495 |
|
|
Junior subordinated debentures |
|
|
26,804 |
|
|
|
26,804 |
|
|
Total liabilities |
|
|
6,685,641 |
|
|
|
6,671,469 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued |
|
|
— |
|
|
|
— |
|
|
Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued |
|
|
— |
|
|
|
— |
|
|
Common stock, $1.00 par, 40,000,000 shares authorized; shares issued and outstanding: 32,639,588 and 32,603,926, respectively |
|
|
32,640 |
|
|
|
32,604 |
|
|
Capital surplus |
|
|
150,995 |
|
|
|
149,709 |
|
|
Retained earnings |
|
|
769,090 |
|
|
|
722,615 |
|
|
Accumulated other comprehensive income (loss), net of income tax of $1,249 and $(731), respectively |
|
|
3,655 |
|
|
|
(2,139 |
) |
|
Total stockholders' equity |
|
|
956,380 |
|
|
|
902,789 |
|
|
Total liabilities and stockholders' equity |
|
$ |
7,642,021 |
|
|
$ |
7,574,258 |
|
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)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
70,990 |
|
|
$ |
65,604 |
|
|
$ |
139,720 |
|
|
$ |
128,523 |
|
|
Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
3,855 |
|
|
|
1,956 |
|
|
|
8,190 |
|
|
|
3,854 |
|
|
Tax-exempt |
|
|
118 |
|
|
|
162 |
|
|
|
244 |
|
|
|
333 |
|
|
Federal funds sold |
|
|
— |
|
|
|
95 |
|
|
|
2 |
|
|
|
199 |
|
|
Interest-bearing deposits with banks |
|
|
8,135 |
|
|
|
7,325 |
|
|
|
15,883 |
|
|
|
13,107 |
|
|
Total interest income |
|
|
83,098 |
|
|
|
75,142 |
|
|
|
164,039 |
|
|
|
146,016 |
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
13,802 |
|
|
|
9,710 |
|
|
|
27,339 |
|
|
|
16,979 |
|
|
Short-term borrowings |
|
|
12 |
|
|
|
8 |
|
|
|
22 |
|
|
|
43 |
|
|
Junior subordinated debentures |
|
|
492 |
|
|
|
544 |
|
|
|
983 |
|
|
|
1,079 |
|
|
Total interest expense |
|
|
14,306 |
|
|
|
10,262 |
|
|
|
28,344 |
|
|
|
18,101 |
|
|
Net interest income |
|
|
68,792 |
|
|
|
64,880 |
|
|
|
135,695 |
|
|
|
127,915 |
|
|
Provision for loan losses |
|
|
2,433 |
|
|
|
1,225 |
|
|
|
4,117 |
|
|
|
1,539 |
|
|
Net interest income after provision for loan losses |
|
|
66,359 |
|
|
|
63,655 |
|
|
|
131,578 |
|
|
|
126,376 |
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust revenue |
|
|
3,250 |
|
|
|
3,396 |
|
|
|
6,427 |
|
|
|
6,525 |
|
|
Service charges on deposits |
|
|
19,114 |
|
|
|
17,537 |
|
|
|
36,777 |
|
|
|
34,190 |
|
|
Securities transactions (includes no accumulated other comprehensive income reclassifications) |
|
|
821 |
|
|
|
115 |
|
|
|
821 |
|
|
|
101 |
|
|
Income from sales of loans |
|
|
868 |
|
|
|
802 |
|
|
|
1,566 |
|
|
|
1,453 |
|
|
Insurance commissions |
|
|
4,420 |
|
|
|
3,927 |
|
|
|
9,685 |
|
|
|
9,126 |
|
|
Cash management |
|
|
4,402 |
|
|
|
3,381 |
|
|
|
8,178 |
|
|
|
6,402 |
|
|
(Loss)/gain on sale of other assets |
|
|
(7 |
) |
|
|
127 |
|
|
|
(11 |
) |
|
|
153 |
|
|
Other |
|
|
1,209 |
|
|
|
1,152 |
|
|
|
2,635 |
|
|
|
2,597 |
|
|
Total noninterest income |
|
|
34,077 |
|
|
|
30,437 |
|
|
|
66,078 |
|
|
|
60,547 |
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
36,124 |
|
|
|
34,776 |
|
|
|
72,295 |
|
|
|
68,966 |
|
|
Occupancy, net |
|
|
2,953 |
|
|
|
3,396 |
|
|
|
5,580 |
|
|
|
6,798 |
|
|
Depreciation |
|
|
3,015 |
|
|
|
2,429 |
|
|
|
6,000 |
|
|
|
4,839 |
|
|
Amortization of intangible assets |
|
|
758 |
|
|
|
759 |
|
|
|
1,517 |
|
|
|
1,492 |
|
|
Data processing services |
|
|
1,262 |
|
|
|
1,195 |
|
|
|
2,742 |
|
|
|
2,398 |
|
|
Net expense/(income) from other real estate owned |
|
|
97 |
|
|
|
19 |
|
|
|
(387 |
) |
|
|
45 |
|
|
Marketing and business promotion |
|
|
1,919 |
|
|
|
1,649 |
|
|
|
4,180 |
|
|
|
4,001 |
|
|
Deposit insurance |
|
|
544 |
|
|
|
640 |
|
|
|
1,077 |
|
|
|
1,259 |
|
|
Other |
|
|
9,936 |
|
|
|
9,393 |
|
|
|
19,810 |
|
|
|
20,348 |
|
|
Total noninterest expense |
|
|
56,608 |
|
|
|
54,256 |
|
|
|
112,814 |
|
|
|
110,146 |
|
|
Income before taxes |
|
|
43,828 |
|
|
|
39,836 |
|
|
|
84,842 |
|
|
|
76,777 |
|
|
Income tax expense |
|
|
9,661 |
|
|
|
9,250 |
|
|
|
18,838 |
|
|
|
16,571 |
|
|
Net income |
|
$ |
34,167 |
|
|
$ |
30,586 |
|
|
$ |
66,004 |
|
|
$ |
60,206 |
|
|
NET INCOME PER COMMON SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.04 |
|
|
$ |
0.93 |
|
|
$ |
2.02 |
|
|
$ |
1.84 |
|
|
Diluted |
|
$ |
1.02 |
|
|
$ |
0.91 |
|
|
$ |
1.98 |
|
|
$ |
1.80 |
|
|
OTHER COMPREHENSIVE GAIN/(LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/(losses) on securities, net of tax of $(1,112), $179, $(1,980) and $653, respectively |
|
|
3,254 |
|
|
|
(541 |
) |
|
|
5,794 |
|
|
|
(1,929 |
) |
|
Reclassification adjustment for gains/(losses) included in net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other comprehensive gains/(losses), net of tax of $(1,112), $179, $(1,980) and $653, respectively |
|
|
3,254 |
|
|
|
(541 |
) |
|
|
5,794 |
|
|
|
(1,929 |
) |
|
Comprehensive income |
|
$ |
37,421 |
|
|
$ |
30,045 |
|
|
$ |
71,798 |
|
|
$ |
58,277 |
|
The accompanying Notes are an integral part of these consolidated financial statements.
3
BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
COMMON STOCK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued at beginning of period |
|
$ |
32,618 |
|
|
$ |
32,708 |
|
|
$ |
32,604 |
|
|
$ |
31,895 |
|
|
Shares issued for stock options |
|
|
22 |
|
|
|
23 |
|
|
|
36 |
|
|
|
103 |
|
|
Shares issued for acquisitions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
733 |
|
|
Issued at end of period |
|
$ |
32,640 |
|
|
$ |
32,731 |
|
|
$ |
32,640 |
|
|
$ |
32,731 |
|
|
CAPITAL SURPLUS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
150,195 |
|
|
$ |
147,762 |
|
|
$ |
149,709 |
|
|
$ |
107,481 |
|
|
Common stock issued for stock options |
|
|
433 |
|
|
|
410 |
|
|
|
745 |
|
|
|
1,620 |
|
|
Common stock issued for acquisitions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38,765 |
|
|
Stock-based compensation arrangements |
|
|
367 |
|
|
|
322 |
|
|
|
541 |
|
|
|
628 |
|
|
Balance at end of period |
|
$ |
150,995 |
|
|
$ |
148,494 |
|
|
$ |
150,995 |
|
|
$ |
148,494 |
|
|
RETAINED EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
744,713 |
|
|
$ |
660,723 |
|
|
$ |
722,615 |
|
|
$ |
638,580 |
|
|
Net income |
|
|
34,167 |
|
|
|
30,586 |
|
|
|
66,004 |
|
|
|
60,206 |
|
|
Cumulative effect of change in accounting principle |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(618 |
) |
|
Dividends on common stock ($0.30, $0.21, $0.60 and $0.42 per share, respectively) |
|
|
(9,790 |
) |
|
|
(6,884 |
) |
|
|
(19,529 |
) |
|
|
(13,743 |
) |
|
Balance at end of period |
|
$ |
769,090 |
|
|
$ |
684,425 |
|
|
$ |
769,090 |
|
|
$ |
684,425 |
|
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain/(losses) on securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
401 |
|
|
$ |
(3,097 |
) |
|
$ |
(2,139 |
) |
|
$ |
(2,327 |
) |
|
Net change |
|
|
3,254 |
|
|
|
(541 |
) |
|
|
5,794 |
|
|
|
(1,929 |
) |
|
Cumulative effect of change in accounting principle |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
618 |
|
|
Balance at end of period |
|
$ |
3,655 |
|
|
$ |
(3,638 |
) |
|
$ |
3,655 |
|
|
$ |
(3,638 |
) |
|
Total stockholders’ equity |
|
$ |
956,380 |
|
|
$ |
862,012 |
|
|
$ |
956,380 |
|
|
$ |
862,012 |
|
The accompanying Notes are an integral part of these consolidated financial statements.
4
BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands)
|
|
|
Six Months Ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
66,004 |
|
|
$ |
60,206 |
|
|
Adjustments to reconcile to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
4,117 |
|
|
|
1,539 |
|
|
Depreciation and amortization |
|
|
7,517 |
|
|
|
6,331 |
|
|
Net amortization of securities premiums and discounts |
|
|
(3,650 |
) |
|
|
(77 |
) |
|
Realized securities gains |
|
|
(821 |
) |
|
|
(101 |
) |
|
Gain on sales of loans |
|
|
(1,566 |
) |
|
|
(1,453 |
) |
|
Cash receipts from the sale of loans originated for sale |
|
|
98,587 |
|
|
|
95,713 |
|
|
Cash disbursements for loans originated for sale |
|
|
(99,782 |
) |
|
|
(97,676 |
) |
|
Deferred income tax benefit |
|
|
(893 |
) |
|
|
(604 |
) |
|
Gain on other assets |
|
|
(455 |
) |
|
|
(156 |
) |
|
Increase in interest receivable |
|
|
(2,064 |
) |
|
|
(2,618 |
) |
|
Increase in interest payable |
|
|
461 |
|
|
|
575 |
|
|
Amortization of stock-based compensation arrangements |
|
|
541 |
|
|
|
628 |
|
|
Excess tax benefit from stock-based compensation arrangements |
|
|
(263 |
) |
|
|
(898 |
) |
|
Other, net |
|
|
4,374 |
|
|
|
(2,847 |
) |
|
Net cash provided by operating activities |
|
|
72,107 |
|
|
|
58,562 |
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net cash received from acquisitions, net of cash paid |
|
|
— |
|
|
|
6,248 |
|
|
Net decrease in federal funds sold |
|
|
— |
|
|
|
750 |
|
|
Purchases of held for investment securities |
|
|
(1,010 |
) |
|
|
(225 |
) |
|
Purchases of available for sale securities |
|
|
— |
|
|
|
(60,604 |
) |
|
Proceeds from maturities, calls and paydowns of held for investment securities |
|
|
440 |
|
|
|
509 |
|
|
Proceeds from maturities, calls and paydowns of available for sale securities |
|
|
358,972 |
|
|
|
59,235 |
|
|
Proceeds from sales of available for sale securities |
|
|
— |
|
|
|
1,467 |
|
|
Purchase of equity securities |
|
|
(2,649 |
) |
|
|
(1,709 |
) |
|
Proceeds from paydowns and sales of equity securities |
|
|
1,892 |
|
|
|
1,080 |
|
|
Net change in loans |
|
|
(121,426 |
) |
|
|
24,177 |
|
|
Purchases of premises, equipment and computer software |
|
|
(12,907 |
) |
|
|
(16,631 |
) |
|
Other, net |
|
|
(3,893 |
) |
|
|
400 |
|
|
Net cash provided by investing activities |
|
|
219,419 |
|
|
|
14,697 |
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net change in deposits |
|
|
8,118 |
|
|
|
(52,831 |
) |
|
Net (decrease)/increase in short-term borrowings |
|
|
(675 |
) |
|
|
1,600 |
|
|
Issuance of common stock in connection with stock options, net |
|
|
781 |
|
|
|
1,723 |
|
|
Cash dividends paid |
|
|
(19,567 |
) |
|
|
(13,566 |
) |
|
Net cash used in financing activities |
|
|
(11,343 |
) |
|
|
(63,074 |
) |
|
Net increase in cash, due from banks and interest-bearing deposits |
|
|
280,183 |
|
|
|
10,185 |
|
|
Cash, due from banks and interest-bearing deposits at the beginning of the period |
|
|
1,424,255 |
|
|
|
1,757,875 |
|
|
Cash, due from banks and interest-bearing deposits at the end of the period |
|
$ |
1,704,438 |
|
|
$ |
1,768,060 |
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest |
|
$ |
27,882 |
|
|
$ |
17,525 |
|
|
Cash paid during the period for income taxes |
|
$ |
17,175 |
|
|
$ |
16,150 |
|
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Stock issued in acquisitions |
|
$ |
— |
|
|
$ |
39,498 |
|
|
Cash consideration for acquisitions |
|
$ |
— |
|
|
$ |
24,722 |
|
|
Fair value of assets acquired in acquisitions |
|
$ |
— |
|
|
$ |
377,320 |
|
|
Liabilities assumed in acquisitions |
|
$ |
— |
|
|
$ |
338,860 |
|
|
Unpaid common stock dividends declared |
|
$ |
9,788 |
|
|
$ |
6,870 |
|
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, 2018.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., BancFirst Risk & Insurance Company and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc., BFTower, 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 the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2018, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.
The unaudited interim consolidated financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2018, the date of the most recent annual report.
Reclassifications
Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported net cash flows, stockholders’ equity or comprehensive income.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.
Recent Accounting Pronouncements
Standards Adopted During Current Period:
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases - (Topic 842)”, amended by ASU 2018-11, “Leases – (Topic 842)”: Targeted Improvements. This new guidance requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than twelve months and provide additional disclosures. The amendments were effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. The Company adopted this new standard on January 1, 2019, using a modified retrospective transition approach and recognized right-of-use lease assets and related lease liabilities totaling $4.3 million. The Company elected to apply certain practical adoption expedients provided under the updates whereby it did not reassess initial direct costs for any existing leases. No cumulative-effect adjustment was recognized as the amount was not material, and the impact on our results of operations and cash flows was also not material. No prior periods were adjusted. See Note 6 for the financial position impact and additional disclosures.
6
Standards Not Yet Adopted:
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820).” ASU 2018-13 removes, modifies and adds disclosure requirements on fair value measurements. ASU 2018-13 will be effective for the Company on January 1, 2020. Early adoption is permitted. In addition, early adoption of any removed or modified disclosures and delayed adoption of the additional disclosures until the effective date is also permitted. The Company expects to adopt the standard in the first quarter of 2020.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 requires enhanced disclosures related to the significant estimates and judgements used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective for the Company on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on its financial statements. In that regard, the Company has formed a task force under the direction of its Chief Financial Officer. In preparation, the Company has developed new credit estimation models, processes and controls. Internal validation of the model is underway and expected to be completed during the third quarter of 2019. The Company has performed test runs of the new processes and controls and will begin full parallel runs next quarter. The adoption of ASU 2016-13 could result in an increase or decrease in the allowance for loan losses as a result of changing from an “incurred loss” model, which encompasses allowances for current known and inherent losses within the portfolio, to an “expected loss” model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13 will necessitate that the Company establish an allowance for expected credit losses for certain debt securities and other financial assets. While the Company is currently unable to reasonably estimate the impact of adopting ASU 2016-13, we expect that the impact of adoption will be significantly influenced by the composition, characteristics and quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of the adoption date. The Company expects to adopt the standard in the first quarter of 2020.
(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
On April 23, 2019, BancFirst Corporation entered into an agreement to acquire Pegasus Bank (“Pegasus”), for an aggregate cash purchase price of $123.5 million. Pegasus is a Texas chartered bank with three banking locations in Dallas, Texas. As of December 31, 2018, Pegasus had approximately $639.1 million in total assets, $367.4 million in loans and $595.3 million in deposits. The acquisition is expected to be completed during the third quarter of 2019. Upon acquisition, Pegasus will continue to operate as “Pegasus Bank” under a separate Texas charter and remain an independent subsidiary of BancFirst Corporation governed by its existing board of directors. BancFirst Corporation intends to provide an appropriate amount of capital or other support to increase Pegasus’ ability to approve larger loans and allow Pegasus to continue to grow their assets.
On August 31, 2018, BFTower, LLC, a wholly-owned subsidiary of BancFirst purchased Cotter Ranch Tower in Oklahoma City for the Company’s corporate headquarters for $21.0 million. Cotter Ranch Tower was subsequently renamed BancFirst Tower. BancFirst Tower consists of an aggregate of 507,000 square feet, has 36 floors and is the second tallest building in Oklahoma City. The BancFirst Tower will remain an income producing property as approximately 55% is currently leased to outside tenants. BancFirst Tower will allow the Company to consolidate operations from three locations to one and will improve operational efficiencies. Upon consolidation, the Company expects to occupy approximately 35% of BancFirst Tower, resulting in approximately 90% total occupancy. Renovations on BancFirst Tower will be substantially completed by the end of 2020 and are expected to cost approximately $70 million. The renovation costs include substantial deferred maintenance including HVAC, plumbing, electrical, elevators, building skin and roof while also including much needed improvements to both the interior and exterior common areas including the lobby, underground and outdoor plaza. The Company could start depreciating certain components of the renovation as they are put into service as early as September 2019. The Company estimates spending approximately $12 million on tenant improvements for the approximate 165,000 square feet that the Company will occupy. The total purchase price, renovation costs, and Company tentant improvement costs were determined to be favorable to other alternatives, such as constructing new corporate headquarters or leasing space. On December 14, 2018, BFTower LLC, purchased a 42.6% ownership interest in SFPG, LLC, which is the owner of a 1,568 space parking garage adjacent to BancFirst Tower, for $9.8 million.
On January 11, 2018, the Company acquired First Wagoner Corp. and its subsidiary bank, First Bank & Trust Company, with locations in Carney, Grove, Ketchum, Luther, Tulsa and Wagoner. First Bank & Trust Company had approximately $290 million in total assets, $247 million in loans and $251 million in deposits. First Bank & Trust Company operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on February 16, 2018. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $6.3 million and goodwill of approximately $19.1 million. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. The acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of First Wagoner Corp. and its subsidiary bank, First Bank & Trust Company complements the Company’s community banking strategy by adding an additional five communities to its banking network in Oklahoma.
7
On January 11, 2018, the Company acquired First Chandler Corp. and its subsidiary bank, First Bank of Chandler, with two locations in Chandler. First Bank of Chandler had approximately $88 million in total assets, $66 million in loans and $79 million in deposits. First Bank of Chandler operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on September 7, 2018. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $2.2 million and goodwill of approximately $6.6 million. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. The acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of First Chandler Corp. and its subsidiary bank, First Bank of Chandler complements the Company’s community banking strategy by increasing its banking network in Oklahoma.
|
(3) |
SECURITIES |
The following table summarizes the amortized cost and estimated fair values of debt securities held for investment:
|
|
|
|
|
|||||||||||||
|
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
||||
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|||||||||||||
|
Mortgage backed securities (1) |
|
$ |
112 |
|
|
$ |
6 |
|
|
$ |
— |
|
|
$ |
118 |
|
|
States and political subdivisions |
|
|
1,385 |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
1,385 |
|
|
Other securities |
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
|
Total |
|
$ |
1,997 |
|
|
$ |
7 |
|
|
$ |
(1 |
) |
|
$ |
2,003 |
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage backed securities (1) |
|
$ |
133 |
|
|
$ |
5 |
|
|
$ |
— |
|
|
$ |
138 |
|
|
States and political subdivisions |
|
|
795 |
|
|
|
— |
|
|
|
— |
|
|
|
795 |
|
|
Other securities |
|
|
500 |
|
|
|
— |
|
|
|
— |
|
|
|
500 |
|
|
Total |
|
$ |
1,428 |
|
|
$ |
5 |
|
|
$ |
— |
|
|
$ |
1,433 |
|
The following table summarizes the amortized cost and estimated fair values of debt securities available for sale:
|
|
|
|
|
|||||||||||||
|
|
|
Amortized Cost |
|
|
Gross Unrealized Gains |
|
|
Gross Unrealized Losses |
|
|
Estimated Fair Value |
|
||||
|
June 30, 2019 |
|
(Dollars in thousands) |
|
|||||||||||||
|
U.S. treasuries |
|
$ |
353,618 |
|
|
$ |
5,371 |
|
|
$ |
(355 |
) |
|
$ |
358,634 |
|
|
U.S. federal agencies |
|
|
26,169 |
|
|
|
12 |
|
|
|
(26 |
) |
|
|
26,155 |
|
|
Mortgage backed securities (1) |
|
|
15,646 |
|
|
|
138 |
|
|
|
(565 |
) |
|
|
15,219 |
|
|
States and political subdivisions |
|
|
22,820 |
|
|
|
335 |
|
|
|
(6 |
) |
|
|
23,149 |
|
|
Total |
|
$ |
418,253 |
|
|
$ |
5,856 |
|
|
$ |
(952 |
) |
|
$ |
423,157 |
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasuries |
|
$ |
699,882 |
|
|
$ |
1,108 |
|
|
$ |
(3,524 |
) |
|
$ |
697,466 |
|
|
U.S. federal agencies |
|
|
30,079 |
|
|
|
— |
|
|
|
(160 |
) |
|
|
29,919 |
|
|
Mortgage backed securities (1) |
|
|
16,367 |
|
|
|
114 |
|
|
|
(573 |
) |
|
|
15,908 |
|
|
States and political subdivisions |
|
|
27,246 |
|
|
|
277 |
|
|
|
(112 |
) |
|
|
27,411 |
|
|
Total |
|
$ |
773,574 |
|
|
$ |
1,499 |
|
|
$ |
(4,369 |
) |
|
$ |
770,704 |
|
|
|
(1) |
Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies. |
8
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.
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||
|
|
|
Amortized Cost |
|
|
Estimated Fair Value |
|
|
Amortized Cost |
|
|
Estimated Fair Value |
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
Held for Investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual maturity of debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year |
|
$ |
300 |
|
|
$ |
301 |
|
|
$ |
495 |
|
|
$ |
495 |
|
|
After one year but within five years |
|
|
1,146 |
|
|
|
1,147 |
|
|
|
369 |
|
|
|
370 |
|
|
After five years but within ten years |
|
|
549 |
|
|
|
553 |
|
|
|
562 |
|
|
|
565 |
|
|
After ten years |
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
Total |
|
$ |
1,997 |
|
|
$ |
2,003 |
|
|
$ |
1,428 |
|
|
$ |
1,433 |
|
|
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual maturity of debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year |
|
$ |
103,395 |
|
|
$ |
103,084 |
|
|
$ |
411,256 |
|
|
$ |
410,327 |
|
|
After one year but within five years |
|
|
270,900 |
|
|
|
276,333 |
|
|
|
313,416 |
|
|
|
311,924 |
|
|
After five years but within ten years |
|
|
6,355 |
|
|
|
6,606 |
|
|
|
7,524 |
|
|
|
7,685 |
|
|
After ten years |
|
|
37,603 |
|
|
|
37,134 |
|
|
|
41,378 |
|
|
|
40,768 |
|
|
Total debt securities |
|
$ |
418,253 |
|
|
$ |
423,157 |
|
|
$ |
773,574 |
|
|
$ |
770,704 |
|
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:
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Book value of pledged securities |
|
$ |
402,756 |
|
|
$ |
472,053 |
|
|
(4) |
LOANS AND ALLOWANCE FOR LOAN LOSSES |
The following is a schedule of loans outstanding by category:
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||
|
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial |
|
$ |
1,062,527 |
|
|
|
20.86 |
% |
|
$ |
1,032,787 |
|
|
|
20.76 |
% |
|
Oil & gas production and equipment |
|
|
122,268 |
|
|
|
2.40 |
|
|
|
94,729 |
|
|
|
1.90 |
|
|
Agriculture |
|
|
130,957 |
|
|
|
2.57 |
|
|
|
136,313 |
|
|
|
2.74 |
|
|
State and political subdivisions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
74,596 |
|
|
|
1.46 |
|
|
|
76,211 |
|
|
|
1.53 |
|
|
Tax-exempt |
|
|
51,114 |
|
|
|
1.00 |
|
|
|
48,415 |
|
|
|
0.97 |
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction |
|
|
450,525 |
|
|
|
8.84 |
|
|
|
451,224 |
|
|
|
9.07 |
|
|
Farmland |
|
|
227,635 |
|
|
|
4.47 |
|
|
|
219,241 |
|
|
|
4.41 |
|
|
One to four family residences |
|
|
990,377 |
|
|
|
19.44 |
|
|
|
979,170 |
|
|
|
19.68 |
|
|
Multifamily residential properties |
|
|
68,743 |
|
|
|
1.35 |
|
|
|
65,949 |
|
|
|
1.33 |
|
|
Commercial |
|
|
1,525,064 |
|
|
|
29.94 |
|
|
|
1,506,937 |
|
|
|
30.28 |
|
|
Consumer |
|
|
345,783 |
|
|
|
6.79 |
|
|
|
328,069 |
|
|
|
6.59 |
|
|
Other (not classified above) |
|
|
44,814 |
|
|
|
0.88 |
|
|
|
36,931 |
|
|
|
0.74 |
|
|
Total loans |
|
$ |
5,094,403 |
|
|
|
100.00 |
% |
|
$ |
4,975,976 |
|
|
|
100.00 |
% |
9
The Company’s loans are mostly to customers within Oklahoma and approximately 64% of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral.
The Company’s commercial and industrial loan category includes a small percentage of loans to companies that provide ancillary services to the oil and gas industry, such as transportation, preparation contractors and equipment manufacturers. The balance of these loans was approximately $74 million at June 30, 2019 and approximately $60 million at December 31, 2018.
Accounting policies related to appraisals, nonaccruals and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
Nonperforming and Restructured Assets
The following is a summary of nonperforming and restructured assets:
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Past due 90 days or more and still accruing |
|
$ |
2,663 |
|
|
$ |
1,916 |
|
|
Nonaccrual |
|
|
17,998 |
|
|
|
22,603 |
|
|
Restructured |
|
|
16,486 |
|
|
|
13,188 |
|
|
Total nonperforming and restructured loans |
|
|
37,147 |
|
|
|
37,707 |
|
|
Other real estate owned and repossessed assets |
|
|
7,004 |
|
|
|
6,873 |
|
|
Total nonperforming and restructured assets |
|
$ |
44,151 |
|
|
$ |
44,580 |
|
Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.0 million for the six months ended June 30, 2019 and approximately $1.1 million for the six months ended June 30, 2018.
The Company charges interest on principal balances outstanding on restructured loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be restructured were not considered to be material.
Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate the allowance for loan losses. The following table is a summary of amounts included in nonaccrual loans, segregated by class of loans. Residential real estate refers to one-to-four family real estate.
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Real estate: |
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
1,127 |
|
|
$ |
838 |
|
|
Non-residential real estate other |
|
|
674 |
|
|
|
187 |
|
|
Residential real estate permanent mortgage |
|
|
1,585 |
|
|
|
954 |
|
|
Residential real estate all other |
|
|
5,327 |
|
|
|
5,488 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
2,958 |
|
|
|
5,682 |
|
|
Consumer non-real estate |
|
|
394 |
|
|
|
437 |
|
|
Other loans |
|
|
272 |
|
|
|
490 |
|
|
Acquired loans |
|
|
5,661 |
|
|
|
8,527 |
|
|
Total |
|
$ |
17,998 |
|
|
$ |
22,603 |
|
10
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 past due loans, segregated by class of loans:
|
|
|
Age Analysis of Past Due Loans |
|
|||||||||||||||||||||||||
|
|
|
30-59 Days Past Due |
|
|
60-89 Days Past Due |
|
|
90 Days and Greater |
|
|
Total Past Due Loans |
|
|
Current Loans |
|
|
Total Loans |
|
|
Accruing Loans 90 Days or More Past Due |
|
|||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||
|
As of June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
4,203 |
|
|
$ |
852 |
|
|
$ |
536 |
|
|
$ |
5,591 |
|
|
$ |
649,600 |
|
|
$ |
655,191 |
|
|
$ |
117 |
|
|
Non-residential real estate other |
|
|
1,088 |
|
|
|
— |
|
|
|
325 |
|
|
|
1,413 |
|
|
|
1,179,092 |
|
|
|
1,180,505 |
|
|
|
177 |
|
|
Residential real estate permanent mortgage |
|
|
2,583 |
|
|
|
760 |
|
|
|
986 |
|
|
|
4,329 |
|
|
|
330,046 |
|
|
|
334,375 |
|
|
|
384 |
|
|
Residential real estate all other |
|
|
2,218 |
|
|
|
340 |
|
|
|
4,908 |
|
|
|
7,466 |
|
|
|
849,448 |
|
|
|
856,914 |
|
|
|
150 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
1,652 |
|
|
|
918 |
|
|
|
2,099 |
|
|
|
4,669 |
|
|
|
1,360,458 |
|
|
|
1,365,127 |
|
|
|
454 |
|
|
Consumer non-real estate |
|
|
1,846 |
|
|
|
540 |
|
|
|
470 |
|
|
|
2,856 |
|
|
|
342,684 |
|
|
|
345,540 |
|
|
|
232 |
|
|
Other loans |
|
|
220 |
|
|
|
1,083 |
|
|
|
183 |
|
|
|
1,486 |
|
|
|
142,387 |
|
|
|
143,873 |
|
|
|
183 |
|
|
Acquired loans |
|
|
2,583 |
|
|
|
882 |
|
|
|
3,592 |
|
|
|
7,057 |
|
|
|
205,821 |
|
|
|
212,878 |
|
|
|
966 |
|
|
Total |
|
$ |
16,393 |
|
|
$ |
5,375 |
|
|
$ |
13,099 |
|
|
$ |
34,867 |
|
|
$ |
5,059,536 |
|
|
$ |
5,094,403 |
|
|
$ |
2,663 |
|
|
As of December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
5,114 |
|
|
$ |
810 |
|
|
$ |
43 |
|
|
$ |
5,967 |
|
|
$ |
620,654 |
|
|
$ |
626,621 |
|
|
$ |
— |
|
|
Non-residential real estate other |
|
|
2,772 |
|
|
|
32 |
|
|
|
114 |
|
|
|
2,918 |
|
|
|
1,143,210 |
|
|
|
1,146,128 |
|
|
|
— |
|
|
Residential real estate permanent mortgage |
|
|
2,448 |
|
|
|
653 |
|
|
|
693 |
|
|
|
3,794 |
|
|
|
324,908 |
|
|
|
328,702 |
|
|
|
430 |
|
|
Residential real estate all other |
|
|
1,728 |
|
|
|
292 |
|
|
|
2,799 |
|
|
|
4,819 |
|
|
|
822,685 |
|
|
|
827,504 |
|
|
|
612 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
3,620 |
|
|
|
702 |
|
|
|
833 |
|
|
|
5,155 |
|
|
|
1,278,499 |
|
|
|
1,283,654 |
|
|
|
282 |
|
|
Consumer non-real estate |
|
|
1,991 |
|
|
|
565 |
|
|
|
559 |
|
|
|
3,115 |
|
|
|
323,747 |
|
|
|
326,862 |
|
|
|
325 |
|
|
Other loans |
|
|
322 |
|
|
|
158 |
|
|
|
178 |
|
|
|
658 |
|
|
|
141,251 |
|
|
|
141,909 |
|
|
|
— |
|
|
Acquired loans |
|
|
5,240 |
|
|
|
1,669 |
|
|
|
4,936 |
|
|
|
11,845 |
|
|
|
282,751 |
|
|
|
294,596 |
|
|
|
267 |
|
|
Total |
|
$ |
23,235 |
|
|
$ |
4,881 |
|
|
$ |
10,155 |
|
|
$ |
38,271 |
|
|
$ |
4,937,705 |
|
|
$ |
4,975,976 |
|
|
$ |
1,916 |
|
Impaired Loans
Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect the full amount of scheduled principal and interest payments in accordance with the original contractual terms of the loan agreement. If a loan is impaired, a specific valuation allowance may be allocated, if necessary, so that the loan is reported, net of allowance for loss, at the present value of future cash flows using the loan’s existing rate, or the fair value of collateral if repayment is expected solely from the collateral.
11
The following table presents impaired loans, segregated by class of loans. During the period ended June 30, 2019 and June 30, 2018, no material amount of interest income was recognized on impaired loans subsequent to their classification as impaired.
|
|
|
Impaired Loans |
|
|||||||||||||
|
|
|
Unpaid Principal Balance |
|
|
Recorded Investment with Allowance |
|
|
Related Allowance |
|
|
Average Recorded Investment |
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
As of June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
8,051 |
|
|
$ |
7,933 |
|
|
$ |
239 |
|
|
$ |
7,662 |
|
|
Non-residential real estate other |
|
|
1,687 |
|
|
|
1,422 |
|
|
|
190 |
|
|
|
1,615 |
|
|
Residential real estate permanent mortgage |
|
|
2,427 |
|
|
|
2,151 |
|
|
|
183 |
|
|
|
1,964 |
|
|
Residential real estate all other |
|
|
6,629 |
|
|
|
6,350 |
|
|
|
3,081 |
|
|
|
6,529 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
18,389 |
|
|
|
10,842 |
|
|
|
931 |
|
|
|
10,944 |
|
|
Consumer non-real estate |
|
|
781 |
|
|
|
672 |
|
|
|
149 |
|
|
|
691 |
|
|
Other loans |
|
|
659 |
|
|
|
455 |
|
|
|
17 |
|
|
|
322 |
|
|
Acquired loans |
|
|
9,553 |
|
|
|
7,244 |
|
|
|
2 |
|
|
|
8,863 |
|
|
Total |
|
$ |
48,176 |
|
|
$ |
37,069 |
|
|
$ |
4,792 |
|
|
$ |
38,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
7,126 |
|
|
$ |
6,933 |
|
|
$ |
202 |
|
|
$ |
7,739 |
|
|
Non-residential real estate other |
|
|
949 |
|
|
|
757 |
|
|
|
50 |
|
|
|
6,057 |
|
|
Residential real estate permanent mortgage |
|
|
1,789 |
|
|
|
1,545 |
|
|
|
127 |
|
|
|
1,650 |
|
|
Residential real estate all other |
|
|
7,177 |
|
|
|
6,862 |
|
|
|
2,433 |
|
|
|
7,154 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
18,507 |
|
|
|
10,977 |
|
|
|
881 |
|
|
|
12,140 |
|
|
Consumer non-real estate |
|
|
928 |
|
|
|
829 |
|
|
|
131 |
|
|
|
846 |
|
|
Other loans |
|
|
710 |
|
|
|
490 |
|
|
|
35 |
|
|
|
481 |
|
|
Acquired loans |
|
|
12,846 |
|
|
|
9,864 |
|
|
|
2 |
|
|
|
11,050 |
|
|
Total |
|
$ |
50,032 |
|
|
$ |
38,257 |
|
|
$ |
3,861 |
|
|
$ |
47,117 |
|
Credit Risk Monitoring and Loan Grading
The Company considers various factors to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical loan loss experience and economic conditions.
An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions.
The general characteristics of the risk grades are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
12
The following table presents internal loan grading by class of loans:
|
|
|
Internal Loan Grading |
|
|||||||||||||||||||||
|
|
|
Grade |
|
|||||||||||||||||||||
|
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
Total |
|
|
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
|
As of June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
457,211 |
|
|
$ |
171,239 |
|
|
$ |
25,491 |
|
|
$ |
1,250 |
|
|
$ |
— |
|
|
$ |
655,191 |
|
|
Non-residential real estate other |
|
|
950,058 |
|
|
|
202,397 |
|
|
|
27,291 |
|
|
|
759 |
|
|
|
— |
|
|
|
1,180,505 |
|
|
Residential real estate permanent mortgage |
|
|
281,593 |
|
|
|
43,479 |
|
|
|
7,242 |
|
|
|
2,061 |
|
|
|
— |
|
|
|
334,375 |
|
|
Residential real estate all other |
|
|
669,269 |
|
|
|
167,518 |
|
|
|
14,375 |
|
|
|
5,752 |
|
|
|
— |
|
|
|
856,914 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
1,077,429 |
|
|
|
252,175 |
|
|
|
33,630 |
|
|
|
1,893 |
|
|
|
— |
|
|
|
1,365,127 |
|
|
Consumer non-real estate |
|
|
320,278 |
|
|
|
21,955 |
|
|
|
2,707 |
|
|
|
565 |
|
|
|
35 |
|
|
|
345,540 |
|
|
Other loans |
|
|
138,414 |
|
|
|
4,160 |
|
|
|
1,289 |
|
|
|
10 |
|
|
|
— |
|
|
|
143,873 |
|
|
Acquired loans |
|
|
124,437 |
|
|
|
71,790 |
|
|
|
9,751 |
|
|
|
6,603 |
|
|
|
297 |
|
|
|
212,878 |
|
|
Total |
|
$ |
4,018,689 |
|
|
$ |
934,713 |
|
|
$ |
121,776 |
|
|
$ |
18,893 |
|
|
$ |
332 |
|
|
$ |
5,094,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
451,059 |
|
|
$ |
157,715 |
|
|
$ |
16,949 |
|
|
$ |
898 |
|
|
$ |
— |
|
|
$ |
626,621 |
|
|
Non-residential real estate other |
|
|
932,454 |
|
|
|
188,341 |
|
|
|
25,146 |
|
|
|
187 |
|
|
|
— |
|
|
|
1,146,128 |
|
|
Residential real estate permanent mortgage |
|
|
279,870 |
|
|
|
39,806 |
|
|
|
7,401 |
|
|
|
1,625 |
|
|
|
— |
|
|
|
328,702 |
|
|
Residential real estate all other |
|
|
644,217 |
|
|
|
162,003 |
|
|
|
15,232 |
|
|
|
6,052 |
|
|
|
— |
|
|
|
827,504 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
1,000,089 |
|
|
|
264,134 |
|
|
|
15,128 |
|
|
|
4,303 |
|
|
|
— |
|
|
|
1,283,654 |
|
|
Consumer non-real estate |
|
|
302,217 |
|
|
|
21,600 |
|
|
|
2,255 |
|
|
|
790 |
|
|
|
— |
|
|
|
326,862 |
|
|
Other loans |
|
|
136,132 |
|
|
|
5,542 |
|
|
|
116 |
|
|
|
119 |
|
|
|
— |
|
|
|
141,909 |
|
|
Acquired loans |
|
|
156,008 |
|
|
|
109,075 |
|
|
|
20,884 |
|
|
|
8,284 |
|
|
|
345 |
|
|
|
294,596 |
|
|
Total |
|
$ |
3,902,046 |
|
|
$ |
948,216 |
|
|
$ |
103,111 |
|
|
$ |
22,258 |
|
|
$ |
345 |
|
|
$ |
4,975,976 |
|
Allowance for Loan Losses Methodology
The allowance for loan losses (“ALL”) methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
13
The following table details activity in the ALL by class of loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
|
|
|
ALL |
|
|||||||||||||||||||||
|
|
|
Balance at beginning of period |
|
|
Charge- offs |
|
|
Recoveries |
|
|
Net charge-offs |
|
|
Provisions charged to operations |
|
|
Balance at end of period |
|
||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
6,655 |
|
|
$ |
(3 |
) |
|
$ |
— |
|
|
$ |
(3 |
) |
|
$ |
235 |
|
|
$ |
6,887 |
|
|
Non-residential real estate other |
|
|
11,362 |
|
|
|
(16 |
) |
|
|
1 |
|
|
|
(15 |
) |
|
|
(60 |
) |
|
|
11,287 |
|
|
Residential real estate permanent mortgage |
|
|
3,261 |
|
|
|
(4 |
) |
|
|
4 |
|
|
|
— |
|
|
|
64 |
|
|
|
3,325 |
|
|
Residential real estate all other |
|
|
11,046 |
|
|
|
(143 |
) |
|
|
25 |
|
|
|
(118 |
) |
|
|
793 |
|
|
|
11,721 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
14,409 |
|
|
|
(87 |
) |
|
|
85 |
|
|
|
(2 |
) |
|
|
825 |
|
|
|
15,232 |
|
|
Consumer non-real estate |
|
|
3,072 |
|
|
|
(162 |
) |
|
|
38 |
|
|
|
(124 |
) |
|
|
286 |
|
|
|
3,234 |
|
|
Other loans |
|
|
2,408 |
|
|
|
— |
|
|
|
43 |
|
|
|
43 |
|
|
|
(2 |
) |
|
|
2,449 |
|
|
Acquired loans |
|
|
702 |
|
|
|
(170 |
) |
|
|
149 |
|
|
|
(21 |
) |
|
|
292 |
|
|
|
973 |
|
|
Total |
|
$ |
52,915 |
|
|
$ |
(585 |
) |
|
$ |
345 |
|
|
$ |
(240 |
) |
|
$ |
2,433 |
|
|
$ |
55,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
6,328 |
|
|
$ |
(9 |
) |
|
$ |
1 |
|
|
$ |
(8 |
) |
|
$ |
567 |
|
|
$ |
6,887 |
|
|
Non-residential real estate other |
|
|
11,027 |
|
|
|
(22 |
) |
|
|
1 |
|
|
|
(21 |
) |
|
|
281 |
|
|
|
11,287 |
|
|
Residential real estate permanent mortgage |
|
|
3,261 |
|
|
|
(67 |
) |
|
|
9 |
|
|
|
(58 |
) |
|
|
122 |
|
|
|
3,325 |
|
|
Residential real estate all other |
|
|
10,673 |
|
|
|
(195 |
) |
|
|
27 |
|
|
|
(168 |
) |
|
|
1,216 |
|
|
|
11,721 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
13,151 |
|
|
|
(157 |
) |
|
|
152 |
|
|
|
(5 |
) |
|
|
2,086 |
|
|
|
15,232 |
|
|
Consumer non-real estate |
|
|
3,065 |
|
|
|
(282 |
) |
|
|
109 |
|
|
|
(173 |
) |
|
|
342 |
|
|
|
3,234 |
|
|
Other loans |
|
|
2,423 |
|
|
|
— |
|
|
|
78 |
|
|
|
78 |
|
|
|
(52 |
) |
|
|
2,449 |
|
|
Acquired loans |
|
|
1,461 |
|
|
|
(196 |
) |
|
|
153 |
|
|
|
(43 |
) |
|
|
(445 |
) |
|
|
973 |
|
|
Total |
|
$ |
51,389 |
|
|
$ |
(928 |
) |
|
$ |
530 |
|
|
$ |
(398 |
) |
|
$ |
4,117 |
|
|
$ |
55,108 |
|
14
|
|
|
ALL |
|
|||||||||||||||||||||
|
|
|
Balance at beginning of period |
|
|
Charge- offs |
|
|
Recoveries |
|
|
Net charge-offs |
|
|
Provisions charged to operations |
|
|
Balance at end of period |
|
||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
|
Three Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
6,650 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(224 |
) |
|
$ |
6,426 |
|
|
Non-residential real estate other |
|
|
10,548 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
157 |
|
|
|
10,705 |
|
|
Residential real estate permanent mortgage |
|
|
3,281 |
|
|
|
(6 |
) |
|
|
23 |
|
|
|
17 |
|
|
|
9 |
|
|
|
3,307 |
|
|
Residential real estate all other |
|
|
9,831 |
|
|
|
(151 |
) |
|
|
3 |
|
|
|
(148 |
) |
|
|
440 |
|
|
|
10,123 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
14,785 |
|
|
|
(153 |
) |
|
|
10 |
|
|
|
(143 |
) |
|
|
427 |
|
|
|
15,069 |
|
|
Consumer non-real estate |
|
|
2,699 |
|
|
|
(194 |
) |
|
|
44 |
|
|
|
(150 |
) |
|
|
290 |
|
|
|
2,839 |
|
|
Other loans |
|
|
2,336 |
|
|
|
(2 |
) |
|
|
12 |
|
|
|
10 |
|
|
|
(18 |
) |
|
|
2,328 |
|
|
Acquired loans |
|
|
1,420 |
|
|
|
(166 |
) |
|
|
5 |
|
|
|
(161 |
) |
|
|
144 |
|
|
|
1,403 |
|
|
Total |
|
$ |
51,550 |
|
|
$ |
(672 |
) |
|
$ |
97 |
|
|
$ |
(575 |
) |
|
$ |
1,225 |
|
|
$ |
52,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
6,195 |
|
|
$ |
(19 |
) |
|
$ |
1 |
|
|
$ |
(18 |
) |
|
$ |
249 |
|
|
$ |
6,426 |
|
|
Non-residential real estate other |
|
|
10,519 |
|
|
|
(1 |
) |
|
|
39 |
|
|
|
38 |
|
|
|
148 |
|
|
|
10,705 |
|
|
Residential real estate permanent mortgage |
|
|
3,226 |
|
|
|
(62 |
) |
|
|
26 |
|
|
|
(36 |
) |
|
|
117 |
|
|
|
3,307 |
|
|
Residential real estate all other |
|
|
9,672 |
|
|
|
(241 |
) |
|
|
6 |
|
|
|
(235 |
) |
|
|
686 |
|
|
|
10,123 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
15,334 |
|
|
|
(309 |
) |
|
|
23 |
|
|
|
(286 |
) |
|
|
21 |
|
|
|
15,069 |
|
|
Consumer non-real estate |
|
|
2,793 |
|
|
|
(444 |
) |
|
|
124 |
|
|
|
(320 |
) |
|
|
366 |
|
|
|
2,839 |
|
|
Other loans |
|
|
2,481 |
|
|
|
(2 |
) |
|
|
24 |
|
|
|
22 |
|
|
|
(175 |
) |
|
|
2,328 |
|
|
Acquired loans |
|
|
1,446 |
|
|
|
(193 |
) |
|
|
23 |
|
|
|
(170 |
) |
|
|
127 |
|
|
|
1,403 |
|
|
Total |
|
$ |
51,666 |
|
|
$ |
(1,271 |
) |
|
$ |
266 |
|
|
$ |
(1,005 |
) |
|
$ |
1,539 |
|
|
$ |
52,200 |
|
The following table details the amount of ALL by class of loans for the period presented, detailed on the basis of the impairment methodology used by the Company.
|
|
|
ALL |
|
|||||||||||||
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment |
|
|
Collectively evaluated for impairment |
|
|
Individually evaluated for impairment |
|
|
Collectively evaluated for impairment |
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
1,003 |
|
|
$ |
5,884 |
|
|
$ |
669 |
|
|
$ |
5,659 |
|
|
Non-residential real estate other |
|
|
1,055 |
|
|
|
10,232 |
|
|
|
1,119 |
|
|
|
9,908 |
|
|
Residential real estate permanent mortgage |
|
|
508 |
|
|
|
2,817 |
|
|
|
505 |
|
|
|
2,756 |
|
|
Residential real estate all other |
|
|
4,189 |
|
|
|
7,532 |
|
|
|
3,413 |
|
|
|
7,260 |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
3,679 |
|
|
|
11,553 |
|
|
|
2,114 |
|
|
|
11,037 |
|
|
Consumer non-real estate |
|
|
427 |
|
|
|
2,807 |
|
|
|
374 |
|
|
|
2,691 |
|
|
Other loans |
|
|
10 |
|
|
|
2,439 |
|
|
|
65 |
|
|
|
2,358 |
|
|
Acquired loans |
|
|
— |
|
|
|
973 |
|
|
|
— |
|
|
|
1,461 |
|
|
Total |
|
$ |
10,871 |
|
|
$ |
44,237 |
|
|
$ |
8,259 |
|
|
$ |
43,130 |
|
15
The following table details the loans outstanding by class of loans for the period presented, on the basis of the impairment methodology used by the Company.
|
|
|
Loans |
|
|||||||||||||||||||||
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
||||||||||||||||||
|
|
|
Individually evaluated for impairment |
|
|
Collectively evaluated for impairment |
|
|
Loans acquired with deteriorated credit quality |
|
|
Individually evaluated for impairment |
|
|
Collectively evaluated for impairment |
|
|
Loans acquired with deteriorated credit quality |
|
||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
|
Real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-residential real estate owner occupied |
|
$ |
26,741 |
|
|
$ |
628,450 |
|
|
$ |
— |
|
|
$ |
17,846 |
|
|
$ |
608,775 |
|
|
$ |
— |
|
|
Non-residential real estate other |
|
|
28,050 |
|
|
|
1,152,455 |
|
|
|
— |
|
|
|
25,333 |
|
|
|
1,120,795 |
|
|
|
— |
|
|
Residential real estate permanent mortgage |
|
|
9,303 |
|
|
|
325,072 |
|
|
|
— |
|
|
|
9,026 |
|
|
|
319,676 |
|
|
|
— |
|
|
Residential real estate all other |
|
|
20,127 |
|
|
|
836,787 |
|
|
|
— |
|
|
|
21,285 |
|
|
|
806,219 |
|
|
|
— |
|
|
Commercial and financial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-consumer non-real estate |
|
|
35,523 |
|
|
|
1,329,604 |
|
|
|
— |
|
|
|
19,432 |
|
|
|
1,264,222 |
|
|
|
— |
|
|
Consumer non-real estate |
|
|
3,304 |
|
|
|
342,236 |
|
|
|
— |
|
|
|
3,093 |
|
|
|
323,769 |
|
|
|
— |
|
|
Other loans |
|
|
10 |
|
|
|
143,863 |
|
|
|
— |
|
|
|
209 |
|
|
|
141,700 |
|
|
|
— |
|
|
Acquired loans |
|
|
14,399 |
|
|
|
196,226 |
|
|
|
2,253 |
|
|
|
22,132 |
|
|
|
265,084 |
|
|
|
7,380 |
|
|
Total |
|
$ |
137,457 |
|
|
$ |
4,954,693 |
|
|
$ |
2,253 |
|
|
$ |
118,356 |
|
|
$ |
4,850,240 |
|
|
$ |
7,380 |
|
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 statements of cash flow. Such transfers during the periods presented, are summarized as follows:
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Other real estate owned |
|
$ |
2,010 |
|
|
$ |
1,123 |
|
|
Repossessed assets |
|
|
627 |
|
|
|
550 |
|
|
Total |
|
$ |
2,637 |
|
|
$ |
1,673 |
|
|
(5) |
INTANGIBLE ASSETS |
The following is a summary of intangible assets:
|
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|||
|
|
|
(Dollars in thousands) |
|
|||||||||
|
As of June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangibles |
|
$ |
25,907 |
|
|
$ |
(12,456 |
) |
|
$ |
13,451 |
|
|
Customer relationship intangibles |
|
|
5,699 |
|
|
|
(4,289 |
) |
|
|
1,410 |
|
|
Mortgage servicing intangibles |
|
|
388 |
|
|
|
(313 |
) |
|
|
75 |
|
|
Total |
|
$ |
31,994 |
|
|
$ |
(17,058 |
) |
|
$ |
14,936 |
|
|
As of December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangibles |
|
$ |
25,907 |
|
|
$ |
(11,113 |
) |
|
$ |
14,794 |
|
|
Customer relationship intangibles |
|
|
5,699 |
|
|
|
(4,115 |
) |
|
|
1,584 |
|
|
Mortgage servicing intangibles |
|
|
397 |
|
|
|
(305 |
) |
|
|
92 |
|
|
Total |
|
$ |
32,003 |
|
|
$ |
(15,533 |
) |
|
$ |
16,470 |
|
16
The following is a summary of goodwill by business segment:
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
Executive, |
|
|
|
|
|
||
|
|
|
Metropolitan |
|
|
Community |
|
|
Financial |
|
|
Operations |
|
|
|
|
|
||||
|
|
|
Banks |
|
|
Banks |
|
|
Services |
|
|
& Support |
|
|
Consolidated |
|
|||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||
|
Six months ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning and end of period |
|
$ |
13,767 |
|
|
$ |
59,894 |
|
|
$ |
5,464 |
|
|
$ |
624 |
|
|
$ |
79,749 |
|
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, 2018.
|
(6) |
LEASES |
Lessee
On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases - (Topic 842),” which requires the recognition of the Company’s operating leases on its balance sheet. See Note (1) for additional information.
The Company has operating leases, which primarily consist of office space in buildings, ATM locations, storage facilities, parking lots and land on which it owns certain buildings. Rent expense for all operating leases totaled approximately $343,000 and $395,000 for the three months ended June 30, 2019 and June 30, 2018, respectively. Rent expense for all operating leases totaled approximately $700,000 and $776,000 for the six months ended June 30, 2019 and June 30, 2018, respectively. As of June 30, 2019, a right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled $5.3 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $5.2 million. There have been no significant changes in our expected future minimum lease payments since December 31, 2018, which are disclosed in Note (19) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. As of June 30, 2019, our operating leases have a weighted-average remaining lease term of 4.5 years and a weighted-average discount rate of 3.6 percent.
Maturity of Operating Lease Liabilities
|
|
|
June 30, 2019 |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
2019 (six months) |
|
$ |
55 |
|
|
2020 |
|
|
829 |
|
|
2021 |
|
|
114 |
|
|
2022 |
|
|
1,542 |
|
|
2023 |
|
|
636 |
|
|
Thereafter |
|
|
2,072 |
|
|
Operating Lease Liability |
|
$ |
5,248 |
|
Lessor
The Company is a lessor of operating leases, which primarily consist of office space in buildings and parking lots. These assets are classified on the balance sheet as premises and equipment. The Company had operating lease revenue of $1.5 million for the three months ended June 30, 2019 and $3.1 million for the six months ended June 30, 2019, which is included in occupancy, net on the consolidated statement of comprehensive income.
17
Future Minimum Lease Payments to be received
The Company does not have operating leases that extend beyond 2024. The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:
|
|
|
June 30, 2019 |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
2019 (six months) |
|
$ |
2,129 |
|
|
2020 |
|
|
2,681 |
|
|
2021 |
|
|
1,788 |
|
|
2022 |
|
|
1,141 |
|
|
2023 |
|
|
681 |
|
|
2024 |
|
|
75 |
|
|
Total Future Minimum Lease Payments |
|
$ |
8,495 |
|
|
(7) |
STOCK-BASED COMPENSATION |
The Company adopted a nonqualified incentive stock option plan (the “BancFirst ISOP”) in May 1986. The Company has amended the BancFirst ISOP since 1986 to increase the number of shares to be issued under the plan to 6,484,530 shares. At June 30, 2019, there were 350,000 shares available for future grants. The BancFirst ISOP will terminate on December 31, 2024, if not extended. The options vest and are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2019 will become exercisable through the year 2026. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.
In June 1999, the Company adopted the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “BancFirst Directors’ Stock Option Plan”). Each non-employee director is granted an option for 10,000 shares. The Company has amended the BancFirst Directors’ Stock Option Plan since 1999 to increase the number of shares to be issued under the plan to 530,000 shares. At June 30, 2019, there were 50,000 shares available for future grants. The BancFirst Directors’ Stock Option Plan will terminate on December 31, 2024, if not extended. The options vest and are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2019 will become exercisable through the year 2023. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.
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.
The following table is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:
|
|
|
|
|
|
|
|
|
|
|
Wgtd. Avg. |
|
|
|
|
|
|
|
|
|
|
|
Wgtd. Avg. |
|
|
Remaining |
|
Aggregate |
|
||
|
|
|
|
|
|
|
Exercise |
|
|
Contractual |
|
Intrinsic |
|
||
|
|
|
Options |
|
|
Price |
|
|
Term |
|
Value |
|
|||
|
|
|
(Dollars in thousands, except option data) |
|
|||||||||||
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2018 |
|
|
1,216,700 |
|
|
$ |
28.48 |
|
|
|
|
|
|
|
|
Options granted |
|
|
40,000 |
|
|
|
55.38 |
|
|
|
|
|
|
|
|
Options exercised |
|
|
(27,300 |
) |
|
|
22.37 |
|
|
|
|
|
|
|
|
Options canceled, forfeited, or expired |
|
|
(22,500 |
) |
|
|
51.83 |
|
|
|
|
|
|
|
|
Outstanding at June 30, 2019 |
|
|
1,206,900 |
|
|
|
29.07 |
|
|
9.20 Yrs |
|
$ |
32,090 |
|
|
Exercisable at June 30, 2019 |
|
|
648,400 |
|
|
|
22.49 |
|
|
7.08 Yrs |
|
$ |
21,506 |
|
18
The following table has additional information regarding options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
||||||||||
|
Total intrinsic value of options exercised |
|
$ |
759 |
|
|
$ |
967 |
|
|
$ |
904 |
|
|
$ |
3,827 |
|
|
Cash received from options exercised |
|
|
455 |
|
|
|
411 |
|
|
|
611 |
|
|
|
1,644 |
|
|
Tax benefit realized from options exercised |
|
|
193 |
|
|
|
246 |
|
|
|
230 |
|
|
|
975 |
|
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 June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
|
|
(Dollars in thousands) |
|
|
(Dollars in thousands) |
|
||||||||||
|
Stock-based compensation expense |
|
$ |
367 |
|
|
$ |
322 |
|
|
$ |
541 |
|
|
$ |
628 |
|
|
Tax benefit |
|
|
94 |
|
|
|
82 |
|
|
|
138 |
|
|
|
160 |
|
|
Stock-based compensation expense, net of tax |
|
$ |
273 |
|
|
$ |
240 |
|
|
$ |
403 |
|
|
$ |
468 |
|
The Company will continue to amortize the unearned stock-based compensation expense over the remaining vesting period of approximately seven years. The following table shows the unearned stock-based compensation expense:
|
|
|
June 30, 2019 |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
Unearned stock-based compensation expense |
|
$ |
3,198 |
|
The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Weighted average grant-date fair value per share of options granted |
|
$ |
13.67 |
|
|
$ |
13.98 |
|
|
Risk-free interest rate |
|
2.62 to 2.76% |
|
|
2.55 to 2.92% |
|
||
|
Dividend yield |
|
2.00% |
|
|
2.00% |
|
||
|
Stock price volatility |
|
22.93 to 22.96% |
|
|
23.05 to 23.29% |
|
||
|
Expected term |
|
10 Yrs |
|
|
10 Yrs |
|
||
The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company’s stock. The expected term is estimated from the historical option exercise experience. The Company accounts for forfeitures as they occur.
In May 1999, the Company adopted the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “BancFirst Deferred Stock Compensation Plan”). The Company has amended the BancFirst Deferred Stock Compensation Plan since 1999 to increase the number of shares to be issued under the plan to 244,148 shares. The BancFirst Deferred Stock Compensation Plan will terminate on December 31, 2024, if not extended. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100% of their board fees. They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member. Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account. There were 8,362 and 3,891 shares of common stock distributed from the BancFirst Deferred Stock Compensation Plan during the six months ended June 30, 2019 and June 30, 2018, respectively.
19
A summary of the accumulated stock units is as follows:
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
Accumulated stock units |
|
|
139,862 |
|
|
|
143,347 |
|
|
Average price |
|
$ |
26.19 |
|
|
$ |
24.91 |
|
|
(8) |
STOCKHOLDERS’ EQUITY |
In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options, and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee.
The following table is a summary of the shares under the program:
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2019 |
|
|
2018 |
|
||
|
Number of shares repurchased |
|
|
— |
|
|
|
— |
|
|
Average price of shares repurchased |
|
$ |
— |
|
|
$ |
— |
|
|
Shares remaining to be repurchased |
|
|
148,736 |
|
|
|
300,000 |
|
The Company and BancFirst are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“FDIC”). These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s and BancFirst’s assets, liabilities and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s financial statements. Management believes that as of June 30, 2019, the Company and BancFirst met all capital adequacy requirements to which they are subject. The actual and required capital amounts and ratios are shown in the following table:
|
|
|
|
|
|
|
|
|
|
|
Required |
|
|
|
|
|
To Be Well |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
For Capital |
|
|
With |
|
|
Capitalized Under |
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Adequacy |
|
|
Capital Conservation |
|
|
Prompt Corrective |
|
|||||||||||||||
|
|
|
Actual |
|
|
Purposes |
|
|
Buffer |
|
|
Action Provisions |
|
||||||||||||||||||||
|
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||||||||||
|
As of June 30, 2019: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BancFirst Corporation |
|
$ |
939,223 |
|
|
16.71% |
|
|
$ |
449,674 |
|
|
|
8.00% |
|
|
$ |
590,197 |
|
|
10.50% |
|
|
N/A |
|
|
N/A |
|
||||
|
BancFirst |
|
|
813,627 |
|
|
14.50% |
|
|
|
448,824 |
|
|
|
8.00% |
|
|
|
589,082 |
|
|
10.50% |
|
|
$ |
561,030 |
|
|
|
10.00% |
|
||
|
Common Equity Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BancFirst Corporation |
|
$ |
858,115 |
|
|
15.27% |
|
|
$ |
252,942 |
|
|
|
4.50% |
|
|
$ |
393,465 |
|
|
7.00% |
|
|
N/A |
|
|
N/A |
|
||||
|
BancFirst |
|
|
738,519 |
|
|
13.16% |
|
|
|
252,464 |
|
|
|
4.50% |
|
|
|
392,721 |
|
|
7.00% |
|
|
$ |
364,670 |
|
|
|
6.50% |
|
||
|
Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Risk Weighted Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BancFirst Corporation |
|
$ |
884,115 |
|
|
15.73% |
|
|
$ |
337,256 |
|
|
|
6.00% |
|
|
$ |
477,779 |
|
|
8.50% |
|
|
N/A |
|
|
N/A |
|
||||
|
BancFirst |
|
|
758,519 |
|
|
13.52% |
|
|
|
336,618 |
|
|
|
6.00% |
|
|
|
476,876 |
|
|
8.50% |
|
|
$ |
448,824 |
|
|
|
8.00% |
|
||
|
Tier 1 Capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(to Total Assets)- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BancFirst Corporation |
|
$ |
884,115 |
|
|
11.64% |
|
|
$ |
303,864 |
|
|
|
4.00% |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|||||
|
BancFirst |
|
|
758,519 |
|
|
10.01% |
|
|
|
303,252 |
|
|
|
4.00% |
|
|
N/A |
|
|
N/A |
|
|
$ |
379,065 |
|
|
|
5.00% |
|
|||
20
As of June 30, 2019, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst as “well capitalized” under the regulatory framework from prompt corrective action. The Company’s trust preferred securities have continued to be included in Tier 1 capital as the Company’s total assets do not exceed $15 billion. There are no conditions or events since the most recent notifications of BancFirst’s capital category that management believes would materially change its category under capital requirements existing as of the report date.
Basel III Capital Rules
Under the Basel III Capital Rules, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of CET1 capital above its minimum risk-based capital requirements. As of June 30, 2019, the Company and BancFirst met all capital adequacy requirements under the Basel III Capital Rules.
|
(9) |
NET INCOME PER COMMON SHARE |
Basic and diluted net income per common share based on weighted-average shares outstanding are calculated as follows:
|
|
|
Income (Numerator) |
|
|
Shares (Denominator) |
|
|
Per Share Amount |
|
|||
|
|
|
(Dollars in thousands, except per share data) |
|
|||||||||
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders |
|
$ |
34,167 |
|
|
|
32,629,146 |
|
|
$ |
1.04 |
|
|
Dilutive effect of stock options |
|
|
— |
|
|
|
688,047 |
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
34,167 |
|
|
|
33,317,193 |
|
|
$ |
1.02 |
|
|
Three Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders |
|
$ |
30,586 |
|
|
|
32,716,350 |
|
|
$ |
0.93 |
|
|
Dilutive effect of stock options |
|
|
— |
|
|
|
742,207 |
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
30,586 |
|
|
|
33,458,557 |
|
|
$ |
0.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders |
|
$ |
66,004 |
|
|
|
32,620,819 |
|
|
$ |
2.02 |
|
|
Dilutive effect of stock options |
|
|
— |
|
|
|
685,610 |
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
66,004 |
|
|
|
33,306,429 |
|
|
$ |
1.98 |
|
|
Six Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders |
|
$ |
60,206 |
|
|
|
32,645,693 |
|
|
$ |
1.84 |
|
|
Dilutive effect of stock options |
|
|
— |
|
|
|
744,269 |
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common stockholders plus assumed exercises of stock options |
|
$ |
60,206 |
|
|
|
33,389,962 |
|
|
$ |
1.80 |
|
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 June 30, 2019 |
|
|
158,500 |
|
|
Three Months Ended June 30, 2018 |
|
|
85,802 |
|
|
Six Months Ended June 30, 2019 |
|
|
169,301 |
|
|
Six Months Ended June 30, 2018 |
|
|
117,696 |
|
21
|
(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:
|
|
• |
Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|
|
• |
Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument. |
|
|
• |
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category includes certain impaired loans, repossessed assets, other real estate owned, goodwill and other intangible assets. |
Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis
A description of the valuation methodologies and key inputs used to measure financial assets and financial liabilities at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to the following categories of the Company’s financial assets and financial liabilities.
Securities Available for Sale
Securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other securities available for sale including U.S. federal agencies, registered mortgage backed securities and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Company also invests in private label mortgage backed securities for which observable information is not readily available. These securities are reported at fair value utilizing Level 3 inputs. For these securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors.
The Company reviews the prices for Level 1 and Level 2 securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio securities that are esoteric or that have complicated structures. The Company’s portfolio primarily consists of traditional investments including U.S. Treasury obligations, federal agency mortgage pass-through securities, general obligation municipal bonds and a small amount of municipal revenue bonds. Pricing for such instruments is fairly generic and is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters for pricing mentioned in the preceding paragraph adjusted for the specific issue. 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.
22
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) |
|
|||||||||||||
|
June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
358,634 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
358,634 |
|
|
U.S. federal agencies |
|
|
— |
|
|
|
26,155 |
|
|
|
— |
|
|
|
26,155 |
|
|
Mortgage-backed securities |
|
|
— |
|
|
|
2,164 |
|
|
|
13,055 |
|
|
|
15,219 |
|
|
States and political subdivisions |
|
|
— |
|
|
|
23,149 |
|
|
|
— |
|
|
|
23,149 |
|
|
Derivative assets |
|
|
— |
|
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
|
Derivative liabilities |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury |
|
$ |
697,466 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
697,466 |
|
|
U.S. federal agencies |
|
|
— |
|
|
|
29,919 |
|
|
|
— |
|
|
|
29,919 |
|
|
Mortgage-backed securities |
|
|
— |
|
|
|
2,465 |
|
|
|
13,443 |
|
|
|
15,908 |
|
|
States and political subdivisions |
|
|
— |
|
|
|
27,411 |
|
|
|
— |
|
|
|
27,411 |
|
|
Derivative assets |
|
|
— |
|
|
|
252 |
|
|
|
— |
|
|
|
252 |
|
|
Derivative liabilities |
|
|
— |
|
|
|
238 |
|
|
|
— |
|
|
|
238 |
|
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:
|
|
|
Six Months Ended June 30, |
|
|
Twelve Months Ended December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Balance at the beginning of the year |
|
$ |
13,443 |
|
|
$ |
14,467 |
|
|
Settlements |
|
|
(396 |
) |
|
|
(1,037 |
) |
|
Total unrealized (losses) gains |
|
|
8 |
|
|
|
13 |
|
|
Balance at the end of the period |
|
$ |
13,055 |
|
|
$ |
13,443 |
|
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 June 30, 2019 and 2018, the Company did not transfer any securities between levels in the fair value hierarchy.
Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities are reported at fair value utilizing Level 3 inputs.
The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. Beginning January 1, 2018, upon adoption of ASU 2016-01, these 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.
Impaired loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. In no case does the fair value of an impaired loan exceed the fair value of the underlying collateral. The impaired loans are adjusted to fair value through a specific allocation of the allowance for loan losses or a direct charge-down of the loan.
Repossessed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible loan losses based upon the fair value of the repossessed asset.
23
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. The fair value represents end of period values, which approximate fair value measurements that occurred on various measurement dates throughout the period:
|
|
|
Total Fair Value |
|
|
|
|
|
Level 3 |
|
|
|
|
|
(Dollars in thousands) |
|
|
|
As of and for the Year-to-date Period Ended June 30, 2019 |
|
|
|
|
|
Equity securities |
|
$ |
9,099 |
|
|
Impaired loans (less specific allowance) |
|
|
32,277 |
|
|
Repossessed assets |
|
|
201 |
|
|
Other real estate owned |
|
|
1,759 |
|
|
|
|
|
|
|
|
As of and for the Year-to-date Period Ended December 31, 2018 |
|
|
|
|
|
Equity securities |
|
$ |
7,521 |
|
|
Impaired loans (less specific allowance) |
|
|
34,396 |
|
|
Repossessed assets |
|
|
183 |
|
|
Other real estate owned |
|
|
4,683 |
|
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
The carrying amount of these short-term instruments is a reasonable estimate of fair value.
Securities Held for Investment
For securities held for investment, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities making adjustments for credit or liquidity if applicable.
Loans Held For Sale
The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank, allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are valued using Level 2 inputs. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis.
Loans
To determine the fair value of loans, 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.
24
Short-term Borrowings
The amounts payable on these short-term instruments are reasonable estimates of fair value.
Junior Subordinated Debentures
The fair values of junior subordinated debentures are estimated using the rates that would be charged for junior subordinated debentures of similar remaining maturities.
Loan Commitments and Letters of Credit
The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair values of letters of credit are based on fees currently charged for similar agreements.
The estimated fair values of the Company’s financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value, are as follows:
|
|
|
June 30, |
|
|
December 31, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||
|
|
|
Carrying Amount |
|
|
Fair Value |
|
|
Carrying Amount |
|
|
Fair Value |
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
FINANCIAL ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,704,438 |
|
|
$ |
1,704,438 |
|
|
$ |
1,424,255 |
|
|
$ |
1,424,255 |
|
|
Securities held for investment |
|
|
1,497 |
|
|
|
1,503 |
|
|
|
928 |
|
|
|
933 |
|
|
Loans held for sale |
|
|
10,899 |
|
|
|
10,899 |
|
|
|
8,174 |
|
|
|
8,174 |
|
|
Level 3 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held for investment |
|
|
500 |
|
|
|
500 |
|
|
|
500 |
|
|
|
500 |
|
|
Loans, net of allowance for loan losses |
|
|
5,039,295 |
|
|
|
5,052,074 |
|
|
|
4,924,587 |
|
|
|
4,901,159 |
|
|
FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 inputs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
6,613,613 |
|
|
|
6,729,518 |
|
|
|
6,605,495 |
|
|
|
6,713,542 |
|
|
Short-term borrowings |
|
|
1,000 |
|
|
|
1,000 |
|
|
|
1,675 |
|
|
|
1,675 |
|
|
Junior subordinated debentures |
|
|
26,804 |
|
|
|
28,777 |
|
|
|
26,804 |
|
|
|
29,549 |
|
|
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan commitments |
|
|
|
|
|
|
2,277 |
|
|
|
|
|
|
|
2,158 |
|
|
Letters of credit |
|
|
|
|
|
|
414 |
|
|
|
|
|
|
|
421 |
|
Non-financial Assets and Non-financial Liabilities Measured at Fair Value
The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis include intangible assets (excluding mortgage service rights, which are valued periodically) and other non-financial long-lived assets measured at fair value and adjusted for impairment. These items are evaluated at least annually for impairment. The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were not considered to be significant to the Company at June 30, 2019 or December 31, 2018.
(11)SEGMENT INFORMATION
The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The four principal business units are metropolitan banks, community banks, other financial services and executive, operations and support. Metropolitan and community banks offer traditional banking products such as commercial and retail lending and a full line of deposit accounts. Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. Community banks consist of banking locations in communities throughout Oklahoma. Other financial services are specialty product business units including guaranteed small business lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units.
25
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 |
|
|
Eliminations |
|
|
Consolidated |
|
||||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||||||||||
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
21,438 |
|
|
$ |
44,775 |
|
|
$ |
1,411 |
|
|
$ |
1,168 |
|
|
$ |
— |
|
|
$ |
68,792 |
|
|
Noninterest income |
|
|
4,635 |
|
|
|
16,243 |
|
|
|
10,105 |
|
|
|
37,917 |
|
|
|
(34,823 |
) |
|
|
34,077 |
|
|
Income before taxes |
|
|
14,866 |
|
|
|
30,041 |
|
|
|
5,572 |
|
|
|
27,590 |
|
|
|
(34,241 |
) |
|
|
43,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
21,084 |
|
|
$ |
42,068 |
|
|
$ |
1,358 |
|
|
$ |
370 |
|
|
$ |
— |
|
|
$ |
64,880 |
|
|
Noninterest income |
|
|
4,184 |
|
|
|
14,832 |
|
|
|
8,896 |
|
|
|
33,609 |
|
|
|
(31,084 |
) |
|
|
30,437 |
|
|
Income before taxes |
|
|
14,883 |
|
|
|
27,942 |
|
|
|
4,028 |
|
|
|
23,622 |
|
|
|
(30,639 |
) |
|
|
39,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
42,791 |
|
|
$ |
88,182 |
|
|
$ |
2,582 |
|
|
$ |
2,140 |
|
|
$ |
— |
|
|
$ |
135,695 |
|
|
Noninterest income |
|
|
8,844 |
|
|
|
31,128 |
|
|
|
19,978 |
|
|
|
73,438 |
|
|
|
(67,310 |
) |
|
|
66,078 |
|
|
Income before taxes |
|
|
30,235 |
|
|
|
58,086 |
|
|
|
10,071 |
|
|
|
52,613 |
|
|
|
(66,163 |
) |
|
|
84,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
41,388 |
|
|
$ |
83,450 |
|
|
$ |
2,833 |
|
|
$ |
244 |
|
|
$ |
— |
|
|
$ |
127,915 |
|
|
Noninterest income |
|
|
8,125 |
|
|
|
28,785 |
|
|
|
18,520 |
|
|
|
65,803 |
|
|
|
(60,686 |
) |
|
|
60,547 |
|
|
Income before taxes |
|
|
29,619 |
|
|
|
54,290 |
|
|
|
9,071 |
|
|
|
43,537 |
|
|
|
(59,740 |
) |
|
|
76,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 |
|
$ |
2,795,525 |
|
|
$ |
4,981,139 |
|
|
$ |
45,972 |
|
|
$ |
883,471 |
|
|
$ |
(1,064,086 |
) |
|
$ |
7,642,021 |
|
|
December 31, 2018 |
|
|
2,743,876 |
|
|
|
4,892,946 |
|
|
|
84,706 |
|
|
|
861,782 |
|
|
|
(1,009,052 |
) |
|
|
7,574,258 |
|
The financial information for each business unit is presented on the basis used internally by management to evaluate performance and allocate resources. The Company utilizes a transfer pricing system to allocate the benefit or cost of funds provided or used by the various business units. Certain services provided by the support group to other business units, such as item processing, are allocated at rates approximating the cost of providing the services. Eliminations are adjustments to consolidate the business units and companies. Capital expenditures are generally charged to the business unit using the asset.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s consolidated financial position and results of operations. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s consolidated financial statements and the related Notes included in Item 1.
FORWARD LOOKING STATEMENTS
The Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management’s current expectations or forecasts of future events. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions; the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
|
|
• |
Local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact. |
|
|
• |
Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs. |
|
|
• |
Inflation, interest rate, crude oil price, securities market and monetary fluctuations. |
|
|
• |
The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company must comply. |
|
|
• |
Impairment of the Company’s goodwill or other intangible assets. |
|
|
• |
Changes in consumer spending, borrowing and savings habits. |
|
|
• |
Changes in the financial performance and/or condition of the Company’s borrowers. |
|
|
• |
Technological changes. |
|
|
• |
Acquisitions and integration of acquired businesses. |
|
|
• |
The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters. |
|
|
• |
The Company’s success at managing the risks involved in the foregoing items. |
Actual results may differ materially from forward-looking statements.
SUMMARY
BancFirst Corporation’s net income for the second quarter of 2019 was $34.2 million, compared to $30.6 million for the second quarter of 2018. Diluted net income per common share was $1.02 and $0.91 for the second quarter of 2019 and 2018, respectively.
Net income was $66.0 million, or $1.98 diluted earnings per share, for the six months ended June 30, 2019, compared to net income of $60.2 million, or $1.80 diluted earnings per share, for the six months ended June 30, 2018. On January 11, 2018 the Company completed the acquisitions of two Oklahoma banking corporations. Consequently, the six months ended June 30, 2018 included one-time acquisition related expenses of approximately $2.2 million.
27
The Company’s net interest income for the second quarter of 2019 increased to $68.8 million, compared to $64.9 million for the second quarter of 2018. The net interest margin for the quarter was 3.89%, compared to 3.70% a year ago. The increase in margin was primarily due to the increase in the federal funds rate throughout 2018. The Company’s provision for loan losses for the second quarter of 2019 was $2.4 million, compared to $1.2 million a year ago. The increase in the provision was primarily due to downgrades of a few commercial loans during the quarter. Net charge-offs for both the second quarter of 2019 and 2018 were 0.01% of average loans. Noninterest income for the quarter totaled $34.1 million, compared to $30.4 million last year. The increase in noninterest income was primarily due to growth in debit card usage fees, sweep fees and equity security gains of $821,000. Noninterest expense for the quarter totaled $56.6 million, compared to $54.3 million last year. The increase in noninterest expenses was primarily due to salary increases in 2019. The Company’s effective tax rate was 22.0% compared to 23.2% for the second quarter of 2018. The decrease in the effective tax rate compared to the second quarter of 2018 was due to an increase in tax credits during the quarter.
At June 30, 2019, the Company’s total assets were $7.6 billion, an increase of $67.8 million from December 31, 2018. Securities of $425.2 million were down $347.0 million from December 31, 2018. Loans totaled $5.1 billion, an increase of $121.2 million from December 31, 2018. Deposits totaled $6.6 billion, virtually unchanged from December 31, 2018. The Company’s total stockholders’ equity was $956.4 million, an increase of $53.6 million over December 31, 2018.
Asset quality remained strong during the second quarter of 2019. Nonperforming and restructured assets represented 0.58% of total assets at June 30, 2019 and 0.59% at December 31, 2018. The allowance to total loans was 1.08% up slightly from 1.03% at year-end 2018. The allowance to nonperforming and restructured loans was 148.35% compared to 136.29% at year-end 2018.
On April 23, 2019, BancFirst Corporation entered into an agreement to acquire Pegasus, for an aggregate cash purchase price of $123.5 million. Pegasus is a Texas chartered bank with three banking locations in Dallas, Texas. As of December 31, 2018, Pegasus had approximately $639.1 million in total assets, $367.4 million in loans and $595.3 million in deposits. The acquisition is expected to be completed during the third quarter of 2019. Upon acquisition, Pegasus will continue to operate as “Pegasus Bank” under a separate Texas charter and remain an independent subsidiary of BancFirst Corporation governed by its existing board of directors. BancFirst Corporation intends to provide an appropriate amount of capital or other support to increase Pegasus’ ability to approve larger loans and allow Pegasus to continue to grow their assets.
On August 31, 2018, BFTower, LLC, a wholly-owned subsidiary of BancFirst, purchased the Cotter Ranch Tower in Oklahoma City for the Company’s corporate headquarters for $21.0 million. Cotter Ranch Tower was subsequently renamed BancFirst Tower. BancFirst Tower consists of an aggregate of 507,000 square feet, has 36 floors and is the second tallest building in Oklahoma City. The BancFirst Tower will remain an income producing property as approximately 55% is currently leased to outside tenants. BancFirst Tower will allow the Company to consolidate operations from three locations to one and will improve operational efficiencies. Upon consolidation, the Company expects to initially occupy approximately 35% of the BancFirst Tower, resulting in approximately 90% total occupancy. Renovations on BancFirst Tower will be substantially completed by the end of 2020 and are expected to cost approximately $70 million. The renovation costs include substantial deferred maintenance including HVAC, plumbing, electrical, elevators, building skin and roof while also including much needed improvements to both the interior and exterior common areas including the lobby, underground and outdoor plaza. The Company could start depreciating certain components of the renovation as they are put into service as early as September 2019. The Company estimates spending approximately $12 million on tenant improvements for the approximate 165,000 square feet that the Company will occupy. The total purchase price, renovation costs, and Company tenant improvement costs were determined to be favorable to other alternatives, such as constructing new corporate headquarters or leasing space. On December 14, 2018, BFTower LLC, purchased a 42.6% ownership interest in SFPG, LLC, which is the owner of a 1,568 space parking garage adjacent to BancFirst Tower, for $9.8 million.
On January 11, 2018, the Company completed the acquisitions of two Oklahoma banking corporations. First Wagoner Corporation and its subsidiary bank, First Bank & Trust Company, and First Chandler Corp. and its subsidiary bank, First Bank of Chandler, had combined total assets of approximately $378 million. The Company exchanged a combination of cash and stock for these transactions.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.
SEGMENT INFORMATION
See Note (11) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.
28
RESULTS OF OPERATIONS
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 June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
Income Statement Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
68,792 |
|
|
$ |
64,880 |
|
|
$ |
135,695 |
|
|
$ |
127,915 |
|
|
Provision for loan losses |
|
|
2,433 |
|
|
|
1,225 |
|
|
|
4,117 |
|
|
|
1,539 |
|
|
Securities transactions |
|
|
821 |
|
|
|
115 |
|
|
|
821 |
|
|
|
101 |
|
|
Total noninterest income |
|
|
34,077 |
|
|
|
30,437 |
|
|
|
66,078 |
|
|
|
60,547 |
|
|
Salaries and employee benefits |
|
|
36,124 |
|
|
|
34,776 |
|
|
|
72,295 |
|
|
|
68,966 |
|
|
Total noninterest expense |
|
|
56,608 |
|
|
|
54,256 |
|
|
|
112,814 |
|
|
|
110,146 |
|
|
Net income |
|
|
34,167 |
|
|
|
30,586 |
|
|
|
66,004 |
|
|
|
60,206 |
|
|
Per Common Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income – basic |
|
$ |
1.04 |
|
|
$ |
0.93 |
|
|
$ |
2.02 |
|
|
$ |
1.84 |
|
|
Net income – diluted |
|
|
1.02 |
|
|
|
0.91 |
|
|
|
1.98 |
|
|
|
1.80 |
|
|
Cash dividends |
|
|
0.30 |
|
|
|
0.21 |
|
|
|
0.60 |
|
|
|
0.42 |
|
|
Performance Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.78 |
% |
|
|
1.62 |
% |
|
|
1.74 |
% |
|
|
1.61 |
% |
|
Return on average stockholders’ equity |
|
|
14.54 |
|
|
|
14.41 |
|
|
|
14.31 |
|
|
|
14.50 |
|
|
Cash dividend payout ratio |
|
|
28.85 |
|
|
|
22.58 |
|
|
|
29.70 |
|
|
|
22.83 |
|
|
Net interest spread |
|
|
3.29 |
|
|
|
3.28 |
|
|
|
3.28 |
|
|
|
3.31 |
|
|
Net interest margin |
|
|
3.89 |
|
|
|
3.70 |
|
|
|
3.87 |
|
|
|
3.68 |
|
|
Efficiency ratio |
|
|
55.03 |
|
|
|
56.92 |
|
|
|
55.91 |
|
|
|
58.44 |
|
|
Net charge-offs to average loans |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.02 |
|
Net Interest Income
For the three months ended June 30, 2019, net interest income, which is the Company’s principal source of operating revenue, increased $3.9 million or 6.0% compared to the three months ended June 30, 2018. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The Company’s net interest margin for the second quarter of 2019 compared to the second quarter of 2018 increased primarily due to the increases in the federal funds rate throughout 2018.
Net interest income for the six months ended June 30, 2019 increased $7.8 million or 6.1% compared to the six months ended June 30, 2018. The net interest margin for the year-to-date increased compared to the same period of the previous year, as shown in the preceding table. The increase in the margin was primarily due to the increase in the federal funds rate throughout 2018.
Provision for Loan Losses
The Company’s provision for loan losses for the second quarter of 2019 was $2.4 million compared to $1.2 million a year ago. The increase in the provision was primarily due to downgrades of a few commercial loans during the quarter. The Company establishes an allowance as an estimate of the probable inherent losses in the loan portfolio at the balance sheet date. Management believes the allowance for loan losses is appropriate based upon management’s best estimate of probable losses that have been incurred within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for loan losses change, the Company’s estimate of probable loan losses could also change, which could affect the amount of future provisions for loan losses. Net loan charge-offs were $240,000 for the second quarter of 2019, compared to $575,000 for the second quarter of 2018. The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at a very low level.
For the six months ended June 30, 2019, the Company’s provision for loan losses was $4.1 million compared to $1.5 million for the six months ended June 30, 2018. Net loan charge-offs were $398,000, compared to $1.0 million for the same period of the prior year.
29
Noninterest Income
Noninterest income, as presented in the preceding table, increased by $3.6 million for second quarter of 2019 compared to the second quarter of 2018. The increase in noninterest income was primarily due to growth in debit card usage fees, sweep fees and equity security gains of $821,000. The Company had fees from debit card usage totaling $8.6 million and $7.4 million during the three month periods ended June 30, 2019 and 2018, respectively. This represents 25.3% and 24.4% of the Company’s noninterest income for the three month periods ended June 30, 2019 and 2018, respectively. In addition, the Company has non-sufficient funds fees totaling $8.1 million and $7.5 million for the three month periods ended June 30, 2019 and 2018, respectively. This represents 23.8% and 24.8% of the Company’s noninterest income for the three month periods ended June 30, 2019 and 2018, respectively.
Noninterest income for the six months ended June 30, 2019 totaled $66.1 million compared to $60.5 million for the six months ended June 30, 2018. The increase in noninterest income was primarily due to growth in debit card usage fees, sweep fees and equity security gains of $821,000. Fees from debit card usage totaled $16.4 million and $14.2 million during the six months ended June 30, 2019 and 2018, respectively. This represents 24.8% and 23.5% of the Company’s noninterest income for the six month periods ended June 30, 2019 and 2018, respectively. In addition, the Company had non-sufficient fund fees totaling $15.7 million and $14.8 million during the six months ended June 30, 2019 and 2018, respectively. This represents 23.8% and 24.5% of the Company’s noninterest income for the six month periods ended June 30, 2019 and 2018, respectively.
The Durbin Amendment is a provision in the larger Dodd-Frank Act that gave the Federal Reserve the authority to establish rates on debit card transactions. The Durbin Amendment aims to control debit card interchange fees and restrict anti-competitive practices. The law applies to banks with over $10 billion in assets and limits these banks on what they charge for debit card interchange fees. If the Company grows to exceed $10 billion in assets, the Durbin Amendment will decrease the Company’s income from debit card usage fees by approximately $15 million annually based on current volume.
Noninterest Expense
For the three months ended June 30, 2019, noninterest expense totaled $56.6 million, compared to $54.3 million for the three months ended June 30, 2018. The increase in noninterest expense was due to salary increases in 2019.
For the six months ended June 30, 2019, noninterest expense totaled $112.8 million compared to $110.1 million for the six months ended June 30, 2018. The slight increase in noninterest expense was due to salary increases in 2019 offset by a decrease in other expense due to nonrecurring acquisition related expenses of approximately $2.2 million in 2018.
Income Taxes
The Company’s effective tax rate on income before taxes was 22.0% for the second quarter of 2019, compared to 23.2% for the second quarter of 2018. The decrease in the effective tax rate compared to the second quarter of 2018 was due to an increase in tax credits during the quarter.
The Company’s effective tax rate on income before taxes was 22.2% for the first six months of 2019, compared to 21.6% for the first six months of 2018.
30
FINANCIAL POSITION
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
7,642,021 |
|
|
$ |
7,574,258 |
|
|
Total loans (net of unearned interest) |
|
|
5,105,302 |
|
|
|
4,984,150 |
|
|
Allowance for loan losses |
|
|
55,108 |
|
|
|
51,389 |
|
|
Debt securities |
|
|
425,154 |
|
|
|
772,132 |
|
|
Deposits |
|
|
6,613,613 |
|
|
|
6,605,495 |
|
|
Stockholders' equity |
|
|
956,380 |
|
|
|
902,789 |
|
|
Book value per share |
|
|
29.30 |
|
|
|
27.69 |
|
|
Tangible book value per share (non-GAAP)(1) |
|
|
26.40 |
|
|
|
24.74 |
|
|
Average loans to deposits (year-to-date) |
|
|
75.71 |
% |
|
|
74.63 |
% |
|
Average earning assets to total assets (year-to-date) |
|
|
92.43 |
|
|
|
92.90 |
|
|
Average stockholders’ equity to average assets (year-to-date) |
|
|
12.13 |
|
|
|
11.37 |
|
|
Asset Quality Ratios |
|
|
|
|
|
|
|
|
|
Nonperforming and restructured loans to total loans |
|
|
0.73 |
% |
|
|
0.76 |
% |
|
Nonperforming and restructured assets to total assets |
|
|
0.58 |
|
|
|
0.59 |
|
|
Allowance for loan losses to total loans |
|
|
1.08 |
|
|
|
1.03 |
|
|
Allowance for loan losses to nonperforming and restructured loans |
|
|
148.35 |
|
|
|
136.29 |
|
|
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
$ |
956,380 |
|
|
$ |
902,789 |
|
|
Less goodwill |
|
|
79,749 |
|
|
|
79,749 |
|
|
Less intangible assets, net |
|
|
14,936 |
|
|
|
16,470 |
|
|
Tangible stockholders' equity (non-GAAP) |
|
$ |
861,695 |
|
|
$ |
806,570 |
|
|
Common shares outstanding |
|
|
32,639,588 |
|
|
|
32,603,926 |
|
|
Tangible book value per share (non-GAAP) |
|
$ |
26.40 |
|
|
$ |
24.74 |
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|||||||
Cash and Interest-Bearing Deposits with Banks
The aggregate of cash and due from banks and interest-bearing deposits with banks increased by $280.2 million or 19.7% to $1.7 billion, from December 31, 2018 to June 30, 2019.
Securities
At June 30, 2019, total debt securities decreased $347.0 million, or 44.9% compared to December 31, 2018, due to maturing U.S. treasury securities. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized gain on securities available for sale, before taxes, was $4.9 million at June 30, 2019, compared to a net unrealized loss of $2.9 million at December 31, 2018. These unrealized gains and losses are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of a gain of $3.7 million at June 30, 2019 and a loss of $2.1 million at December 31, 2018.
Loans (Including Acquired Loans)
At June 30, 2019, loans totaled $5.1 billion, an increase of $121.2 million from December 31, 2018. The slight increase in loans was due to internal growth.
31
Allowance for Loan Losses/Fair Value Adjustments on Acquired Loans
At June 30, 2019, the allowance for loan losses to total loans represented 1.08% of total loans, compared to 1.03% at December 31, 2018.
The fair value adjustment on acquired loans consists of an interest rate component to adjust the effective rates on the loans to market rates and a credit component to adjust for estimated credit exposures in the acquired loans. The interest rate component was $1.9 million at June 30, 2019 and $2.2 million at December 31, 2018. The credit component of the adjustment was $6.3 million at June 30, 2019 and $7.6 million at December 31, 2018 while the acquired loans outstanding were $212.9 million and $294.6 million, respectively.
Nonperforming and Restructured Assets
Nonperforming and restructured assets totaled $44.2 million at June 30, 2019, compared to $44.6 million at December 31, 2018. The Company’s level of nonperforming and restructured assets has continued to be relatively low.
Nonaccrual loans totaled $18.0 million at June 30, 2019, compared to $22.6 million at the end of 2018. The Company’s nonaccrual loans are primarily commercial and real estate loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of interest or principal or both is in serious doubt. Interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is reasonably expected. Otherwise, interest income is not recognized until the principal balance is fully collected. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.0 million for the six months ended June 30, 2019 and $1.1 million for the six months ended June 30, 2018. Only a small amount of this interest is expected to be ultimately collected.
Restructured loans totaled $16.5 million at June 30, 2019, compared to $13.2 million at the end of 2018. The increase in restructured loans was due primarily to a few commercial loans identified as troubled debt restructurings during the quarter. The Company charges interest on principal balances outstanding during deferral periods. As a result, the current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings whose terms were modified during the period were not considered to be material.
Other real estate owned and repossessed assets totaled $7.0 million at June 30, 2019, compared to $6.9 million at December 31, 2018.
Potential problem loans are performing loans to borrowers with a weakened financial condition, or which are experiencing unfavorable trends in their financial condition, which causes management to have concerns as to the ability of such borrowers to comply with the existing repayment terms. The Company had approximately $15.2 million of these loans at June 30, 2019, compared to $8.0 million at December 31, 2018. Potential problem loans are not included in nonperforming and restructured loans. In general, these loans are adequately collateralized and have no specific identifiable probable loss. Loans which are considered to have identifiable probable loss potential are placed on nonaccrual status, are allocated a specific allowance for loss or are directly charged-down, and are reported as nonperforming.
Liquidity and Funding
Deposits
At June 30, 2019, deposits totaled $6.6 billion, a small increase of $8.1 million from the December 31, 2018 total. 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 98.2% at June 30, 2019 and 98.1% at December 31, 2018. Noninterest-bearing deposits to total deposits were 39.8% at June 30, 2019, compared to 39.6% at December 31, 2018.
Short-Term Borrowings
Short-term borrowings, consisting primarily of federal funds purchased and repurchase agreements are another source of funds for the Company. The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained. Short-term borrowings were $1.0 million at June 30, 2019, compared to $1.7 million at December 31, 2018.
32
Long-Term Borrowings
The Company has a line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas to use for liquidity or to match-fund certain long-term fixed-rate loans. The Company’s assets, including residential first mortgages of $786.0 million, are pledged as collateral for the borrowings under the line of credit. As of June 30, 2019 and December 31, 2018, the Company had no advances outstanding under the line of credit from FHLB. In addition, the Company has a revolving line of credit with another financial institution with the ability to draw up to $10.0 million with no advances outstanding. This line of credit has a variable rate based on prime rate minus 25 basis points and matures in 2020.
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, 2018.
Capital Resources
Stockholders’ equity totaled $956.4 million at June 30, 2019, compared to $902.8 million at December 31, 2018. In addition to net income of $66.0 million, other changes in stockholders’ equity during the six months ended June 30, 2019 included $780,000 related to common stock issuances, $541,000 related to stock-based compensation and a $5.8 million increase in other comprehensive income, that were partially offset by $19.5 million in dividends. The Company’s leverage ratio and total risk-based capital ratios at June 30, 2019, were well in excess of the regulatory requirements.
See Note (8) of the Notes to Consolidated Financial Statements for a discussion of capital ratio requirements.
CONTRACTUAL OBLIGATIONS
There have not been any material changes in the resources required for scheduled repayments of contractual obligations from the table of Contractual Cash Obligations included in Management’s Discussion and Analysis which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
33
BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)
Taxable Equivalent Basis (Dollars in thousands)
|
|
|
Three Months Ended June 30, |
|
|||||||||||||||||||||
|
|
|
2019 |
|
|
2018 |
|
||||||||||||||||||
|
|
|
|
|
|
|
Interest |
|
|
Average |
|
|
|
|
|
|
Interest |
|
|
Average |
|
||||
|
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
|
Average |
|
|
Income/ |
|
|
Yield/ |
|
||||||
|
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
|
Balance |
|
|
Expense |
|
|
Rate |
|
||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1) |
|
$ |
5,082,637 |
|
|
$ |
71,142 |
|
|
|
5.61 |
% |
|
$ |
4,959,604 |
|
|
$ |
65,750 |
|
|
|
5.32 |
% |
|
Securities – taxable |
|
|
666,966 |
|
|
|
3,855 |
|
|
|
2.32 |
|
|
|
440,420 |
|
|
|
1,956 |
|
|
|
1.78 |
|
|
Securities – tax exempt |
|
|
20,215 |
|
|
|
150 |
|
|
|
2.97 |
|
|
|
28,060 |
|
|
|
206 |
|
|
|
2.94 |
|
|
Federal funds sold and interest-bearing deposits with banks |
|
|
1,339,375 |
|
|
|
8,135 |
|
|
|
2.44 |
|
|
|
1,633,030 |
|
|
|
7,420 |
|
|
|
1.82 |
|
|
Total earning assets |
|
|
7,109,193 |
|
|
|
83,282 |
|
|
|
4.70 |
|
|
|
7,061,114 |
|
|
|
75,332 |
|
|
|
4.28 |
|
|
Nonearning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
|
177,489 |
|
|
|
|
|
|
|
|
|
|
|
184,547 |
|
|
|
|
|
|
|
|
|
|
Interest receivable and other assets |
|
|
457,888 |
|
|
|
|
|
|
|
|
|
|
|
389,845 |
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
|
(53,365 |
) |
|
|
|
|
|
|
|
|
|
|
(51,802 |
) |
|
|
|
|
|
|
|
|
|
Total nonearning assets |
|
|
582,012 |
|
|
|
|
|
|
|
|
|
|
|
522,590 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
7,691,205 |
|
|
|
|
|
|
|
|
|
|
$ |
7,583,704 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction deposits |
|
$ |
738,742 |
|
|
$ |
659 |
|
|
|
0.36 |
% |
|
$ |
820,681 |
|
|
$ |
602 |
|
|
|
0.29 |
% |
|
Savings deposits |
|
|
2,637,248 |
|
|
|
10,424 |
|
|
|
1.59 |
|
|
|
2,502,282 |
|
|
|
7,189 |
|
|
|
1.15 |
|
|
Time deposits |
|
|
678,680 |
|
|
|
2,719 |
|
|
|
1.61 |
|
|
|
754,710 |
|
|
|
1,919 |
|
|
|
1.02 |
|
|
Short-term borrowings |
|
|
1,859 |
|
|
|
12 |
|
|
|
2.67 |
|
|
|
2,030 |
|
|
|
8 |
|
|
|
1.55 |
|
|
Junior subordinated debentures |
|
|
26,804 |
|
|
|
492 |
|
|
|
7.37 |
|
|
|
31,959 |
|
|
|
544 |
|
|
|
6.83 |
|
|
Total interest-bearing liabilities |
|
|
4,083,333 |
|
|
|
14,306 |
|
|
|
1.41 |
|
|
|
4,111,662 |
|
|
|
10,262 |
|
|
|
1.00 |
|
|
Interest-free funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
|
2,626,877 |
|
|
|
|
|
|
|
|
|
|
|
2,590,698 |
|
|
|
|
|
|
|
|
|
|
Interest payable and other liabilities |
|
|
38,459 |
|
|
|
|
|
|
|
|
|
|
|
29,752 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
942,536 |
|
|
|
|
|
|
|
|
|
|
|
851,592 |
|
|
|
|
|
|
|
|
|
|
Total interest free funds |
|
|
3,607,872 |
|
|
|
|
|
|
|
|
|
|
|
3,472,042 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
7,691,205 |
|
|
|
|
|
|
|
|
|
|
$ |
7,583,704 |
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
$ |
68,976 |
|
|
|
|
|
|
|
|
|
|
$ |
65,070 |
|
|
|
|
|
|
Net interest spread |
|
|
|
|
|
|
|
|
|
|
3.29 |
% |
|
|
|
|
|
|
|
|
|
|
3.28 |
% |
|
Effect of interest free funds |
|
|
|
|
|
|
|
|
|
|
0.60 |
% |
|
|
|
|
|
|
|
|
|
|
0.42 |
% |
|
Net interest margin |
|
|
|
|
|
|
|
|
|
|
3.89 |
% |
|
|
|
|
|
|
|
|
|
|
3.70 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis |
|
|||||||||||||||||||||||
34
35
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, 2018, the date of its most recent annual report to stockholders.
Item 4. Controls and Procedures.
The Company’s Chief Executive Officer, Chief Financial Officer and its Disclosure Committee, which includes the Company’s Executive Chairman, Chief Risk Officer, Chief Internal Auditor, Chief Asset Quality Officer, Controller, General Counsel and Vice President of Corporate Finance, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and procedures. Based on their evaluation they concluded that the disclosure controls and procedures of the Company are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms.
No changes were made to the Company’s internal control over financial reporting during the period covered by this report that materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.
36
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.
Except as set forth below, as of June 30, 2019, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018:
The Company’s noninterest income may be reduced
The Durbin Amendment is a provision in the larger Dodd-Frank Act that gave the Federal Reserve the authority to establish rates on debit card transactions. The Durbin Amendment aims to control debit card interchange fees and restrict anti-competitive practices. The law applies to banks with over $10 billion in assets and limits these banks on what they charge for debit card interchange fees. If the Company grows to exceed $10 billion in assets, the Durbin Amendment will decrease the Company’s income from debit card usage fees by approximately $15 million annually based on current volume.
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.
37
Item 6. Exhibits.
|
Exhibit
|
|
Exhibit |
|
|
|
|
|
|
|
|
|
2.1 |
|
|
|
3.1 |
|
|
|
|
|
|
|
3.2 |
|
|
|
|
|
|
|
4.1 |
|
Instruments defining the rights of securities holders (see Exhibits 3.1 and 3.2 above). |
|
|
|
|
|
4.2 |
|
|
|
|
|
|
|
4.3 |
|
|
|
|
|
|
|
4.4 |
|
|
|
|
|
|
|
4.5 |
|
|
|
|
|
|
|
4.6 |
|
|
|
|
|
|
|
4.7 |
|
|
|
|
|
|
|
4.8 |
|
|
|
|
|
|
|
4.9 |
|
|
|
|
|
|
|
10.1 |
|
|
|
10.2 |
|
|
|
10.3 |
|
|
|
10.4 |
|
|
|
10.5 |
|
|
38
|
Exhibit
|
|
Exhibit |
|
10.6 |
|
|
|
10.7* |
|
Sixth Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan.
|
|
10.8* |
|
Sixth Amended and Restated BancFirst Corporation Directors’ Stock Option Plan.
|
|
10.9* |
|
Fifteenth Amended and Restated BancFirst Corporation Stock Option Plan.
|
|
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* |
|
Interactive Data File - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
|
|
|
|
|
104* |
|
The cover page from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL (included in Exhibit 101). |
|
|
|
|
|
* |
Filed herewith. |
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: August 2, 2019 |
|
/s/ David Harlow |
|
|
|
David Harlow |
|
|
|
President |
|
|
|
Chief Executive Officer |
|
|
|
(Principal Executive Officer) |
|
|
|
|
|
Date: August 2, 2019 |
|
/s/ Kevin Lawrence |
|
|
|
Kevin Lawrence |
|
|
|
Executive Vice President |
|
|
|
Chief Financial Officer |
|
|
|
(Principal Financial Officer) |
40
Exhibit 10.7
SIXTH AMENDED AND RESTATED
BANCFIRST CORPORATION DIRECTORS'
DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1Purpose. This Sixth Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Plan”) incorporates the amendments to the Fifth Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan adopted by the stockholders of BancFirst Corporation (the “Corporation) on May 23, 2019.
The Plan is intended to advance the interests of the Company and its shareholders by providing a means to attract and retain highly-qualified persons to serve as Directors and to promote ownership by Directors of a greater proprietary interest in the Company, thereby aligning such Directors' interests more closely with the interests of shareholders of the Company.
The Plan is intended to comply with Section 409A of the United States Tax Code.
1.2Effective Date. This Plan shall become effective September 1, 1999.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1"Bank" means BancFirst, an Oklahoma banking corporation, or any successor thereto.
2.2"Bank Board" means the Board of Directors of the Bank.
2.3“Change in Control Event” means the date on which any of the following events occur (i) a change in the ownership of the Company; (ii) a change in the effective control of the Company; (iii) a change in the ownership of a substantial portion of the assets of the Company.
For purposes of this Section, a change in the ownership of the Company occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. A change in the effective control of the Company occurs on the date on which either (i) a person, or more than one person acting as a group, acquires ownership of stock of the Company possessing 35% or more of the total voting power of the stock of the Company, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Company Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Company Board prior to the date of the appointment or election, but only if no other corporation is a majority shareholder of the Company. A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to the Company, acquires assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.
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An event constitutes a Change in Control Event with respect to a Participant only if the Participant performs services for the Company or the Participant’s relationship to the Company otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii).
The determination as to the occurrence of a Change in Control Event shall be based on objective facts and in accordance with the requirements of Code Section 409A.
2.4“Code” means the Internal Revenue Code of 1986, as amended.
2.5"Committee" means the Compensation Committee of the Company Board.
2.6"Community Board" means one of the Community Advisory Boards of the Bank.
2.7"Company" means BancFirst Corporation, an Oklahoma corporation, or any successor thereto.
2.8"Company Board" means the Board of Directors of the Company.
2.9"Deferral Date" means the date Fees would otherwise have been paid to the Participant.
2.10"Director" means any individual who is a member of the Bank Board, the Company Board or the Community Board.
2.11"Fair Market Value" means the closing sales price for the Shares on the relevant date, or if there were no sales on such date the closing sales price on the nearest day before the relevant date, as reported in The Wall Street Journal or a similar publication selected by the Committee.
2.12"Fees" means all or part of any retainer and/or fees payable to a Director in his or her capacity as a Director.
2.13"Participant" means a Director who defers Fees under Article VI of this Plan.
2.14"Secretary" means the Corporate Secretary or any Assistant Corporate Secretary of the Company.
2.15"Separation from Service" means termination of service as a Director in any of the following circumstances:
(a)Where the Participant voluntarily resigns or retires;
(b)Where the Participant is not re-elected (or elected in the case of an appointed Director) to the Bank Board or Company Board, as applicable, by the shareholders, or to the Community Board by the Bank;
(c)Where the Participant dies; or
(d)Where the Participant is removed from the Bank Board, Company Board or Community Board, as applicable, in accordance with the provisions of the Company's Bylaws or the Bank's Bylaws, as applicable.
Whether a Separation from Service has occurred shall be determined by the Company Board or Committee in accordance with Section 409A of the Code.
2.16"Shares" means shares of the common stock of BancFirst Corporation, par value $1.00 per share, or of any successor corporation or other legal entity adopting this Plan.
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2.17“Specified Employee” means those Directors who are determined by the Company Board or the Committee to be a “specified employee” of the Company or its affiliates in accordance with Section 409A of the Code and the regulations promulgated thereunder.
2.18"Stock Units" means the credits to a Participant's Stock Unit Account under Article VI of this Plan, each of which represents the right to receive one Share upon settlement of the Stock Unit Account.
2.19"Stock Unit Account" means the bookkeeping account established by the Company pursuant to Section 6.4.
2.20"Termination Date" means the date the Plan terminates pursuant to Section 11.8.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of Shares that may be distributed in settlement of Stock Units under this Plan that are accumulated subsequent to the effective date of this amended and restated Plan shall not exceed 40,000 Shares. Such Shares may include authorized but unissued Shares or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1This Plan shall be administered by the Company Board's Compensation Committee, or such other committee or individual as may be designated by the Company Board. Notwithstanding the foregoing, no director who is a Participant under this Plan shall participate in any determination relating solely or primarily to his or her own Shares, Stock Units or Stock Unit Account.
4.2It shall be the duty of the Committee to administer this Plan in accordance with its provisions and to make such recommendations of amendments or otherwise as it deems necessary or appropriate.
4.3The Committee shall have the authority to make all determinations it deems necessary or advisable for administering this Plan, subject to the limitations in Section 4.1 and other explicit provisions of this Plan.
ARTICLE V
ELIGIBILITY
5.1Each Director shall be eligible to defer Fees under Article VI of this Plan.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1General Rule. Each Director may, in lieu of receipt of Fees, defer such Fees in accordance with this Article VI, provided that such Director is eligible under Article V of this Plan to defer such Fees at the date any such Fees are otherwise payable.
6.2Timing of Election. Each eligible Director who wishes to defer Fees under this Plan must make a written election prior to the start of the calendar year for which the Fees would otherwise be paid; provided, however, that with respect to (a) any election made by a newly-elected or appointed Director ("New Director Elections") and (b) any elections made by Directors with respect to Fees paid during the period commencing July 1, 1999 and ending December 31, 1999 ("1999 Elections"), the following special rules shall apply: (i) with respect to any New Director Elections, any such New Director Election must be made within 30 days of the election or
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appointment, and (ii) with respect to any 1999 Elections, such elections shall be made prior to July 1, 1999 and shall be effective for any Fees paid on or after July 1, 1999. An election by a Director shall be deemed to be continuing and therefore applicable to Fees to be paid in the future unless the Director evokes or changes such election by filing a new election form by the due date for such form specified in this Section 6.2.
6.3Form of Election. An election shall be made in a manner satisfactory to the Secretary. Generally, an election shall be made by completing and filing the specified election form with the Secretary of the company within the period described in Section 6.2. At a minimum, the form shall require the Director to specify the following:
(a)a percentage (in 25% increments), not to exceed an aggregate of 100% of the Fees to be deferred under this Plan; and
(b)the manner of settlement in accordance with Section 7.2.
6.4Establishment of Stock Unit Account. The Company will establish a Stock Unit Account for each Participant. All Fees deferred pursuant to this Article VI shall be credited to the Participant's Stock Unit Account as of the Deferral Date and converted to Stock Units as follows: The number of Stock Units shall equal the deferred Fees divided by the Fair Market Value of a Share on the Deferral Date, with fractional units calculated to three (3) decimal places.
6.5Credit of Dividend Equivalents. As of each dividend payment date with respect to Shares, each Participant shall have credited to his or her Stock Unit Account an additional number of Stock Units equal to: the per-share cash dividend payable with respect to a Share on such dividend payment date multiplied by the number of Stock Units held in the Stock Unit Account as of the close of business on the record date for such dividend divided by the Fair Market Value of a Share on such dividend payment date. If dividends are paid on Shares in a form other than cash, then such dividends shall be notionally converted to cash, if their value is readily determinable, and credited in a manner consistent with the foregoing and, if their value is not readily determinable, shall be credited "in kind" to the Participant's Stock Unit Account.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1Settlement of Account. The Company will settle a Participant's Stock Unit Account in the manner described in Section 7.2 as soon as administratively feasible but in no event later than 90 days following the earlier of (i) notification of such Participant's Separation from Service or (ii) a Change in Control Event. Notwithstanding the foregoing, in no event shall a Specified Employee receive a payment under this Plan following a Separation from Service before the first business day of the seventh month following the date of Separation from Service, unless the Separation from Service results from death.
7.2Payment Options. An election filed under Article VI shall specify whether the Participant's Stock Unit Account is to be settled by delivering to the Participant (or his or her beneficiary) the number of Shares equal to the number of whole Stock Units then credited to the Participant's Stock Unit Accounts, in (a) a lump sum, or (b) substantially equal annual installments over a period not to exceed three (3) years. If, upon lump sum distribution or final distribution of an installment, less than one whole Stock Unit is credited to a Participant's Stock Unit Account, cash will be paid in lieu of fractional shares on the date of such distribution.
7.3Continuation of Dividend Equivalents. If payment of Stock Units is deferred and paid in installments, the Participant's Stock Unit Account shall continue to be credited with dividend equivalents as provided in Section 6.5.
7.4In Kind Dividends. If any "in kind" dividends were credited to the Participant's Stock Unit Account under Section 6.5, such dividends shall be payable to the Participant in full on the date of the first distribution of Shares under Section 7.2.
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UNFUNDED STATUS
The interest of each Participant in any Fees deferred under this Plan (and any Stock Units or Stock Unit Account relating thereto) shall be that of a general creditor of the Company. Stock Unit Accounts, and Stock Units (and, if any, "in kind" dividends) credited thereto, shall at all times be maintained by the Company as bookkeeping entries evidencing unfunded and unsecured general obligations of the Company.
ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or more beneficiaries to receive the Shares described in Section 7.2 in the event of such Participant's death. The Company may rely upon the beneficiary designation last filed with the Committee, provided that such form was executed by the Participant or his or her legal representative and filed with the Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization merger, consolidation, spin-off, combination, repurchase, exchange of shares or other securities of the Company, stock split or reverse split, or similar corporate transaction or event affects Shares, an adjustment to the number or kind of shares to be delivered upon settlement of Stock Unit Accounts under Article VII by the Company Board or Committee to prevent dilution or enlargement of Participants' rights under this Plan in a manner that is proportionate to the change to the Shares and is otherwise equitable.
ARTICLE XI
GENERAL PROVISIONS
11.1No Right to Continue as a Director. Nothing contained in this Plan will confer upon any Participant any right to continue to serve as a Director.
11.2No Shareholder Rights Conferred. Nothing contained in this Plan will confer upon any Participant any rights of a shareholder of the Company unless and until Shares are in fact issued or transferred to such Participant in accordance with Article VII.
11.3Change to the Plan. The Company Board may amend, alter, suspend, discontinue, extend, or terminate the Plan without the consent of the Participants; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant with respect to any Stock Units credited to his or her Stock Unit Account.
11.4Consideration; Agreements. The consideration for Shares issued or delivered in lieu of payment of Fees will be the Director's service during the period to which the Fees paid in the form of Shares related.
11.5Compliance with Laws and obligations. The Company will not be obligated to issue or deliver Shares in connection with this Plan in a transaction subject to the registration requirements of the Securities Act of 1933, as amended, or any other federal or state securities law, any requirement under any listing agreement between the Company and any national securities exchange or automated quotation system or any other laws, regulations, or contractual obligations of the Company, until the Company is satisfied that such laws, regulations, and other obligations of the Company have been complied with in full. Certificates representing Shares delivered under the Plan will be subject to such stop-transfer orders and other restrictions as may be applicable under such laws, regulations, and other obligations of the Company, including any requirement that a legend or legends be placed thereon.
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11.6Limitations on Transferability. Stock Units and any other right will not be transferable by a Participant except by will or the laws of descent and distribution (or to a designated beneficiary in the event of a Participant's death). Stock Units and other rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to the claims of creditors.
11.7Governing Law. The validity, construction, and effect of the Plan and any agreement hereunder will be determined in accordance with the laws of the State of Oklahoma, without giving effect to principles of conflicts of laws, and applicable federal law.
11.8Plan Termination. Unless earlier terminated by action of the Company Board, the Plan will remain in effect until the earlier of (i) such time as no Shares remain available for delivery under the Plan and the Company has no further rights or obligations under the Plan or (ii) December 31, 2024.
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Exhibit 10.8
SIXTH AMENDED AND RESTATED
BANCFIRST CORPORATION NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
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1. |
PURPOSE. This Sixth Amended and Restated BancFirst Corporation Non-Employee Directors’ Stock Option Plan (“the Plan”) incorporates the amendments to the Fifth Amended and Restated BancFirst Corporation non-Employee Directors’ Stock Option Plan adopted by the stockholders of BancFirst Corporation (the “Corporation”) on May 23, 2019. |
The Plan is intended as an incentive and to encourage stock ownership by the non-employee directors of the Corporation in order to increase their proprietary interest in the Corporation's success.
The Plan is intended to comply with Section 409A of the United States Tax Code.
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2. |
DEFINITIONS. As used herein, the following terms shall have the corresponding meanings: |
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2.1. |
“Committee” shall mean the Board of Directors of the Corporation, or a duly constituted committee of the Board consisting of three or more members, at least a majority of which shall be “Non-Employee Directors” as such term is used in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
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2.2 |
“Common Stock” shall mean the common stock, par value $1.00 per share, of the Corporation. |
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2.3. |
“Date of Grant” shall mean the date of grant of a Stock Option granted hereunder as set forth in the Stock Option Agreement. In the event of a grant conditioned, among other things, upon stockholder ratification of this Plan, the date of such conditional grant shall be the Date of Grant for purposes of this Plan. |
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2.4. |
“Non-Employee Director” shall mean a person that is an elected or appointed member of the board of directors of a corporation, who is not a common-law employee of the corporation. The determination of whether or not a person is a Non-Employee of the Corporation with respect to the grant or exercise of a Stock Option shall be made in accordance with the rule of Income Tax Regulation Section 1.421-7(h) (or successor regulation). |
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2.5. |
“Fair Market Value” shall mean, with respect to the exercise of an option under the Plan, (a) if the Common Stock is listed on a national securities exchange or the NASDAQ Global Market, the closing price of the Common Stock for the business day immediately preceding the day of the Date of Grant, or (b) if the Common Stock is not then listed on an exchange, the average of the closing bid and asked prices per share for the Common Stock in the over-the-counter market as quoted on NASDAQ for the business day of the Date of Grant, or (c) if the Common Stock is not then listed on any exchange or quoted on NASDAQ, an amount determined in good faith by the Committee to be the fair market value of the Common Stock, after consideration of all relevant factors. |
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2.6 |
“Nonqualified Stock Option” shall mean a Stock Option which is not intended to qualify for tax treatment as an “incentive stock option” under Section 422 of the Code. |
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2.7. |
“Option Exercise Price” shall mean the price paid for Shares upon the exercise of a Stock Option granted hereunder. |
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2.8. |
“Optionee” shall mean any person entitled to exercise a Stock Option pursuant to the terms of the Plan. |
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3. |
ADMINISTRATION. |
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3.1 |
AUTHORITY; INDEMNIFICATION. Within the limitations described herein, the Committee shall administer the Plan, determine the method of payment upon exercise of each Stock Option, determine all other terms of Stock Options granted hereunder and interpret, construe and implement the provisions of the Plan. All questions of interpretation of the Plan or any Stock Option granted under the Plan shall be determined by the Committee, and such decisions shall be binding upon all persons having an interest in the Plan and/or any Stock Option. No member of the Committee shall be liable for any action or determination made in good faith, and the members shall be entitled to indemnification and reimbursement in the manner provided in the Corporation's Certificate of Incorporation, or as otherwise permitted by law. |
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3.2 |
RULE 16B-3 COMPLIANCE. With respect to the participation of eligible participants who are subject to Section 16(b) of the Exchange Act, the Plan shall be administered in compliance with the requirements of Rule 16b-3. |
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3.3 |
SECTION 162(M) COMPLIANCE. In the event the Corporation is a “publicly held corporation” as defined in paragraph (2) of section 162(m) of the Code, as amended by the Revenue Reconciliation Act of 1993 (P.L. 103-66), and the regulations promulgated thereunder (“Section 162(m)”), the Corporation shall establish a committee of outside directors meeting the requirements of Section 162(m) to approve the grant of Stock Options which might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes pursuant to Section 162(m). |
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4. |
ELIGIBILITY. The individuals who shall be eligible to participate in the Plan shall be such Non-Employee Directors of the Corporation, or of any corporation (“Subsidiary”) in which the Corporation has proprietary interest by reason of stock ownership or otherwise, including any corporation in which the Corporation acquires a proprietary interest after the adoption of this Plan (but only if the Corporation owns, directly or indirectly, stock possessing not less than 50% of the total combined voting power of all classes of stock in the corporation), as the Committee shall determine from time to time. |
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5. |
STOCK. The stock subject to Stock Options and other provisions of the Plan shall be shares of the Corporation’s authorized but unissued Common Stock or treasury stock, as determined by the Committee. Subject to adjustment in accordance with the provisions of Subparagraph 6.7 hereof, the total number of shares of Common Stock of the Corporation on which Stock Options may be granted under the Plan subsequent to the effective date of this amended and restated Plan shall not exceed in the aggregate 50,000 shares. In the event that any outstanding Stock Option under the Plan for any reason expires or is terminated prior to the end of the period during which Stock Options may be granted, the shares of the Common Stock allocable to the unexercised portion of such Stock Option may again be subject to a Stock Option under the Plan. |
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6. |
TERMS AND CONDITIONS OF STOCK OPTIONS. Stock Options granted pursuant to the Plan shall be evidenced by agreements in such form as the Committee shall, from time to time, approve. Agreements shall comply with and be subject to the following terms and conditions: |
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6.1 |
MEDIUM AND TIME OF PAYMENT. The Option Exercise Price shall be payable in United States Dollars upon the exercise of the Stock Option and may be paid in cash or by certified check, bank draft or money order payable to the order of the Corporation, unless otherwise determined by the Committee. |
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6.2 |
NUMBER OF SHARES. Each Non-Employee Director shall be granted a Stock Option for 10,000 shares. |
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6.3 |
OPTION EXERCISE PRICE. The Option Exercise Price shall be equal to the Fair Market Value of the Common Stock on the Date of Grant. |
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6.4 |
TERM OF STOCK OPTIONS. Any Stock Option granted must be exercised within fifteen (15) years of the date of such grant. |
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6.5 |
DATE OF EXERCISE. Unless otherwise determined by the Committee at the time of granting a Stock Option, Stock Options shall be exercisable at the rate set forth below beginning one year from the Date of Grant. After becoming exercisable, the Stock Option may be exercised at any time and from time to time in whole or in part until termination of the Stock Option as set forth in Sections 6.4 or 6.6. |
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Elapsed Years from Date of Grant |
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Percent of Shares |
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Cumulative Percent of Shares |
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less than 1 year |
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0 |
% |
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0 |
% |
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1 to 2 years |
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25 |
% |
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25 |
% |
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2 to 3 years |
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25 |
% |
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50 |
% |
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3 to 4 years |
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25 |
% |
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75 |
% |
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more than 4 years |
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25 |
% |
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100 |
% |
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6.6 |
TERMINATION OF BOARD SERVICE. In the event that an Optionee's service on the board of directors of the Corporation shall terminate, his Stock Option whether or not then exercisable shall terminate immediately; provided, however, that if the termination is not as a result of embezzlement, theft or other violation of the law, the Optionee shall have the right to exercise his option (to the extent exercisable at the time of termination) at any time within 30 days after such termination; provided, further, that if the Optionee shall die while in service on the board of directors of the Corporation or within the period of time after termination of service during which he was entitled to exercise his option as hereinabove provided, his estate, personal representative, or beneficiary shall have the right to exercise his Stock Option (to the extent exercisable at the date of death) at any time within twelve (12) months from the date of his death. |
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6.7 |
RECAPITALIZATION. The aggregate number of shares of Common Stock on which Stock Options may be granted to persons participating under the Plan, the number of shares thereof covered by each outstanding Stock Option, and the price per share thereof in each such Stock Option, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock of the Corporation resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares, effected without receipt of consideration by the Corporation; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In the event of a change in the Corporation's Common Stock which is limited to a change in the designation thereof to “Capital Stock” or other similar designation, or a change in the par value thereof, or from par value to no par value, without increase in the number of issued shares, the shares resulting from any such change shall be deemed to be Common Stock within the meaning of the Plan. |
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Stock Options shall become immediately exercisable; or (iii) whether such Stock Options may be exchanged for options covering securities of any such surviving or resulting corporation, subject to the agreement of any such surviving or resulting corporation, on terms and conditions substantially similar to a Stock Option hereunder. |
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6.9 |
ASSIGNABILITY. Except as provided in this Section, no Stock Option shall be assignable or transferable except as follows: |
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(a) |
by will or by the laws of descent and distribution. |
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(b) |
for the purpose of making a charitable gift. |
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(c) |
to the Optionee as trustee of a revocable trust which allows the Optionee to amend or revoke the trust at any time. If the Optionee relinquishes his power to amend or revoke the trust or appoints a trustee other than the Optionee, the Optionee shall withdraw the Stock Option from the trust prior to the relinquishment of such power or appointment and revest title to the Stock Option in the Optionee's individual name. If the trust becomes irrevocable due to the death of the Optionee, the successor trustee shall have the same power to exercise the Stock Option under Section 6.6 as the personal representative. If there is a successor trustee under the trust due to the incapacity of the Optionee, the date of incapacity shall be treated as termination of employment under Section 6.6, and the successor trustee shall have the same right to exercise the option as the Optionee has under Section 6.6. The trustee or any successor trustee shall be bound by all the terms and conditions of the Plan and the Stock Option Agreement entered into by the Plan and Optionee under this Plan. |
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(d) |
to the extent set forth in the Stock Option Agreement governing such Stock Option. |
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6.10 |
OPTIONEE'S AGREEMENT. If, at the time of the exercise of any Stock Option, it is necessary or desirable, in order to comply with any applicable laws or regulations relating to the sale of securities, that the Optionee exercising the Stock Option shall agree that he will purchase the shares that are subject to the Stock Option for investment and not with any present intention to resell the same, the Optionee will, upon the request of the Corporation, execute and deliver to the Corporation an agreement to such effect. |
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6.11 |
RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a stockholder with respect to shares covered by his Stock Option until the date of issuance of the shares to him and only after such shares are fully paid. |
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6.12 |
OTHER PROVISIONS. The option agreements authorized under the Plan may contain such other provisions as the Committee shall deem advisable. |
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7. |
MARKETABILITY OF SHARES. The Common Stock is currently traded on the NASDAQ Global Select Market System. As a result, its liquidity varies widely in response to supply and demand. Consequently, the Corporation can give no assurances as to the marketability of shares acquired under the Plan. |
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8. |
TAX IMPLICATIONS. It is anticipated that Stock Options granted under the Plan will be treated as Nonqualified Stock Options by the Internal Revenue Service. As such, exercise of the Stock Option would generate a taxable event with the difference between the original Option Exercise Price and the Fair Market Value of the Common Stock at the time of exercise being treated as ordinary income. |
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9. |
TERM OF PLAN. No Stock Option may be granted after December 31, 2024. |
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10. |
NO OBLIGATION TO EXERCISE OPTION. The granting of a Stock Option shall impose no obligation upon the Optionee to exercise such Stock Option. |
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11. |
AMENDMENTS. The Board of Directors may from time to time amend, alter, suspend, or discontinue the Plan or alter or amend any and all option agreements granted thereunder; provided, however, that no such action of the Board of Directors may, without approval of the stockholders of the Corporation, alter the provisions of the Plan so as to (a) materially increase the benefits accruing to participants under the Plan; (b) materially increase the number of securities which may be issued under the Plan; (c) materially modify the requirements as to eligibility for participation in the Plan; or (d) decrease the Option Exercise Price of any option exercise agreements, by cancellation and substitution of options or otherwise; and provided, further, that no amendment may, without the consent of the Optionee, affect any then outstanding Stock Options or unexercised portions thereof. In addition, the approval of the Corporation's stockholders shall be sought for any amendment to the Plan or a Stock Option for which the Committee deems stockholder approval necessary in order to comply with Rule 16b-3.” |
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Exhibit 10.9
FIFTEENTH AMENDED AND RESTATED
BANCFIRST CORPORATION STOCK OPTION PLAN
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1. |
PURPOSE. This Fifteenth Amended and Restated BancFirst Corporation Stock Option Plan (“the Plan”) incorporates the amendments to the Fourteenth Amended and Restated BancFirst Corporation Stock Option Plan adopted by the stockholders of BancFirst Corporation (the “Corporation”) on May 23, 2019. |
The Plan is intended as an incentive and to encourage stock ownership by certain key employees and officers of the Corporation in order to increase their proprietary interest in the Corporation's success.
The Plan is intended to comply with Section 409A of the United States Tax Code.
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2. |
DEFINITIONS. As used herein, the following terms shall have the corresponding meanings: |
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2.1. |
“Committee” shall mean the Board of Directors of the Corporation, or the Executive Committee of the Board of Directors acting under authority delegated by the Board of Directors. |
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2.2 |
“Common Stock” shall mean the common stock, par value $1.00 per share, of the Corporation. |
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2.3. |
“Date of Grant” shall mean the date of the approval by the Committee of a Stock Option granted hereunder as set forth in the Stock Option Award Terms and Conditions. In the event of a grant conditioned, among other things, upon stockholder ratification of this Plan, the date of such conditional grant shall be the Date of Grant for purposes of this Plan. |
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2.4. |
“Employee” shall mean any common-law employee of the Corporation. The determination of whether or not a person is an Employee of the Corporation with respect to the grant or exercise of an Incentive Stock Option shall be made in accordance with the rule of Income Tax Regulation Section 1.421-7(h) (or successor regulation). |
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2.5. |
“Fair Market Value” shall mean, with respect to the grant of an option under the Plan, (a) if the Common Stock is listed on a national securities exchange or the NASDAQ Global Market, the closing price of the Common Stock for the business day of the Date of Grant, or (b) if the Common Stock is not then listed on an exchange, the average of the closing bid and asked prices per share for the Common Stock in the over-the-counter market as quoted on such market for the business day of the Date of Grant, or (c) if the Common Stock is not then listed on any exchange or quoted on an over-the-counter market, an amount determined in good faith by the Committee to be the fair market value of the Common Stock, after consideration of all relevant factors, on the Date of Grant. In all events, “Fair Market Value” shall be determined in good faith by the Committee in a manner that will comply with the provisions of Section 409A of the Code and the regulations promulgated thereunder. |
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2.6 |
“Nonqualified Stock Option” shall mean a Stock Option which is not intended to qualify for tax treatment as an “incentive stock option” under Section 422 of the Code. |
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2.7 |
“Option Exercise Price” shall mean the price paid for Shares upon the exercise of a Stock Option granted hereunder. |
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2.8 |
“Optionee” shall mean any person entitled to exercise a Stock Option pursuant to the terms of the Plan. |
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2.9 |
“Stock Option” shall mean a stock option giving an Optionee the right to purchase shares of the Corporation’s Common Stock. Stock Options granted under the Plan shall be Nonqualified Stock Options. |
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3. |
ADMINISTRATION. |
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3.1 |
AUTHORITY; INDEMNIFICATION. Within the limitations described herein, the Committee shall administer the Plan, select the Employees of the Corporation, including officers of the Corporation, to whom Stock Options shall be granted, determine the number of Shares to be subject to each grant, determine the method of payment upon exercise of each Stock Option, determine all other terms of Stock Options granted hereunder and interpret, construe and implement the provisions of the Plan. All questions of interpretation of the Plan or any Stock Option granted under the Plan shall be determined by the Committee, and such decisions shall be binding upon all persons having an interest in the Plan and/or any Stock Option. No member of the Committee shall be liable for any action or determination made in good faith, and the members shall be entitled to indemnification and reimbursement in the manner provided in the Corporation's Certificate of Incorporation, or as otherwise permitted by law. A member of the Committee shall be eligible to receive a grant of a Stock Option under the Plan on the same terms as other Employees. However, if the Committee grants Stock Options to a member of the Committee, such grant shall not be effective until such grant is approved by the Compensation Committee, consisting of three or more "independent directors" as defined in and determined pursuant to the Marketplace Rules of the NASDAQ Global Market, Inc. ("NASDAQ") or any other stock exchange upon which the Common Stock of the Corporation is listed. |
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3.2 |
RULE 16B-3 COMPLIANCE. With respect to the participation of eligible participants who are subject to Section 16(b) of the Exchange Act, the Plan shall be administered in compliance with the requirements of Rule 16b-3. |
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4. |
ELIGIBILITY. The individuals who shall be eligible to participate in the Plan shall be such key Employees (including officers) of BancFirst Corporation, or of any corporation (“Subsidiary”) in which the Corporation has proprietary interest by reason of stock ownership or otherwise, including any corporation in which the Corporation acquires a proprietary interest after the adoption of this Plan (but only if the Corporation owns, directly or indirectly, stock possessing not less than 50% of the total combined voting power of all classes of stock in the corporation), as the Committee shall determine from time to time. |
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5. |
STOCK. The stock subject to Stock Options and other provisions of the Plan shall be shares of the Corporation’s authorized but unissued Common Stock or treasury stock, as determined by the Committee. Subject to adjustment in accordance with the provisions of Subparagraph 6.7 hereof, the total number of shares of Common Stock of the Corporation on which Stock Options may be granted under the Plan subsequent to the effective date of this amended and restated Plan shall not exceed in the aggregate 350,000 shares. In the event that any outstanding Stock Option under the Plan for any reason expires or is terminated prior to the end of the period during which Stock Options may be granted, the shares of the Common Stock allocable to the unexercised portion of such Stock Option may again be subject to a Stock Option under the Plan. |
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6. |
TERMS AND CONDITIONS OF STOCK OPTIONS. Stock Options granted pursuant to the Plan shall be evidenced by a Stock Option Award Terms and Conditions document in such form as the Committee shall, from time to time, approve. Awards shall comply with and be subject to the following terms and conditions: |
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6.1 |
MEDIUM AND TIME OF PAYMENT. The Option Exercise Price shall be payable in United States Dollars upon the exercise of the Stock Option and may be paid in cash or by certified check, bank draft or money order payable to the order of the Corporation, unless otherwise determined by the Committee. |
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6.2 |
NUMBER OF SHARES. The Stock Option shall state the total number of shares to which it pertains. |
2
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6.3 |
OPTION EXERCISE PRICE. The Option Exercise Price shall be not less than the Fair Market Value of the Common Stock on the Date of Grant. |
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6.4 |
TERM OF STOCK OPTIONS. The period during which Stock Options shall be exercisable shall be fixed by the Committee, but in no event shall a Stock Option be exercisable after the expiration of fifteen (15) years from the date such Stock Option is granted. Subject to the foregoing, Stock Options shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance determine, which restrictions and conditions need not be the same for all Stock Options. |
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6.5 |
DATE OF EXERCISE. Unless otherwise determined by the Committee at the time of granting a Stock Option, Stock Options shall be exercisable at the rate set forth below beginning four years from the Date of Grant. After becoming exercisable, the Stock Option may be exercised at any time and from time to time in whole or in part until termination of the Stock Option as set forth in Sections 6.4 or 6.6. |
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Elapsed Years from Date of Grant |
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Percent of Shares |
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Cumulative Percent of Shares |
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less than 4 years |
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0 |
% |
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0 |
% |
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4 but less than 5 years |
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25 |
% |
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25 |
% |
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5 but less than 6 years |
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25 |
% |
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50 |
% |
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6 but less than 7 years |
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25 |
% |
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75 |
% |
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7 or more years |
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25 |
% |
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100 |
% |
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6.6 |
TERMINATION OF EMPLOYMENT. In the event that an Optionee's employment by the Corporation shall terminate, his Stock Option whether or not then exercisable shall terminate immediately; provided, however, that if the termination is not as a result of embezzlement, theft or other violation of the law, the Optionee shall have the right to exercise his option (to the extent exercisable at the time of termination) at any time within 30 days after such termination; provided, further, that if any termination of employment is related to the Optionee's retirement with the consent of the Corporation, the Optionee shall have the right to exercise his Stock Option (to the extent exercisable up to the date of retirement) at any time within three months after such retirement; and provided, further, that if the Optionee shall die while in the employment of the Corporation or within the period of time after termination of employment or retirement during which he was entitled to exercise his option as hereinabove provided, his estate, personal representative, or beneficiary shall have the right to exercise his Stock Option (to the extent exercisable at the date of death) at any time within twelve (12) months from the date of his death. |
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6.7 |
RECAPITALIZATION. The aggregate number of shares of Common Stock on which Stock Options may be granted to persons participating under the Plan, the number of shares thereof covered by each outstanding Stock Option, and the price per share thereof in each such Stock Option, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock of the Corporation resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares, effected without receipt of consideration by the Corporation; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. In the event of a change in the Corporation's Common Stock which is limited to a change in the designation thereof to “Capital Stock” or other similar designation, or a change in the par value thereof, or from par value to no par value, without increase in the number of issued shares, the shares resulting from any such change shall be deemed to be Common Stock within the meaning of the Plan. |
3
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shares of Common Stock subject to the Stock Option would have been entitled. In the event of a dissolution or liquidation of the Corporation or a merger or consolidation in which the Corporation is not the surviving or resulting corporation or which results in a change in control of the Corporation, or a tender or exchange offer which results in a change in control of the Corporation, the Committee shall determine: (i) whether all or any part of the unexercisable portion (as set forth in section 6.5) of any Stock Option outstanding under the Plan shall terminate; (ii) whether the Stock Options shall become immediately exercisable; or (iii) whether such Stock Options may be exchanged for options covering securities of any such surviving or resulting corporation, subject to the agreement of any such surviving or resulting corporation, on terms and conditions substantially similar to a Stock Option hereunder. |
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6.9 |
ASSIGNABILITY. Except as provided in this Section, no Stock Option shall be assignable or transferable except as follows: |
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(a) |
by will or by the laws of descent and distribution. |
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(b) |
for the purpose of making a charitable gift as permitted by Section 6.13. |
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(c) |
to the Optionee as trustee, or to the Optionee and one or more others as co-trustees, of a revocable trust which allows the Optionee to amend or revoke the trust at any time. If the Optionee relinquishes his power to amend or revoke the trust or resigns as a trustee, the Optionee shall withdraw the Stock Option from the trust prior to the relinquishment of such power or his resignation as trustee and shall revest title to the Stock Option in the Optionee’s individual name. If the trust becomes irrevocable due to the death of the Optionee, the successor or remaining trustee(s) shall have the same power to exercise the Stock Option under Section 6.6 hereof as the personal representative. If the Optionee becomes incapacitated, the date of incapacity shall be deemed for purposes of this Plan as the date of termination of employment under Section 6.6 (whether or not Optionee’s employment has actually terminated), and the successor or remaining trustee(s) of the trust shall have the same right to exercise the Stock Option as a terminated Optionee has under Section 6.6. The Optionee as trustee and any successor or remaining trustee(s) shall be bound by all the terms and conditions of the Plan and the Stock Option Award Terms and Conditions delivered by the Company to the Optionee under this Plan. |
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(d) |
to the extent set forth in the Stock Option Award Terms and Conditions governing such Stock Option. |
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6.10 |
OPTIONEE'S AGREEMENT. If, at the time of the exercise of any Stock Option, it is necessary or desirable, in order to comply with any applicable laws or regulations relating to the sale of securities, that the Optionee exercising the Stock Option shall agree that he will purchase the shares that are subject to the Stock Option for investment and not with any present intention to resell the same, the Optionee will, upon the request of the Corporation, execute and deliver to the Corporation an agreement to such effect. |
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6.11 |
RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a stockholder with respect to shares covered by his Stock Option until the date of issuance of the shares to him and only after such shares are fully paid. |
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6.12 |
OTHER PROVISIONS. The Stock Option Award Terms and Conditions authorized under the Plan may contain such other provisions as the Committee shall deem advisable. |
4
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assigned to a Charity, in whole or in part, it shall continue to be subject to the restrictions of Sections 6.5 and 6.6 hereof, which shall thereafter apply to the same extent as if the Stock Option were still held by the Optionee himself (if he is living), or by his estate, personal representative or beneficiary (if he is deceased). |
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7. |
MARKETABILITY OF SHARES. The Common Stock is currently traded on the NASDAQ Global Select Market System. As a result, its liquidity varies widely in response to supply and demand. Consequently, the Corporation can give no assurances as to the marketability of shares acquired under the Plan. |
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8. |
TAX IMPLICATIONS. It is anticipated that Stock Options granted under the Plan will be treated as Nonqualified Stock Options by the Internal Revenue Service. As such, exercise of the Stock Option would generate a taxable event with the difference between the original Option Exercise Price and the Fair Market Value of the Common Stock at the time of exercise being treated as ordinary income. If a Stock Option is transferred to a Charity as permitted by Sections 6.9(b) and 6.13 hereof, the Optionee should expect to have ordinary income attributed to him at the time the Charity exercises the Stock Option, in the same amount and with the same effect as if the Optionee himself exercised the Stock Option. |
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9. |
TERM OF PLAN. No Stock Option may be granted after December 31, 2024. |
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10. |
NO OBLIGATION TO EXERCISE OPTION. The granting of a Stock Option shall impose no obligation upon the Optionee to exercise such Stock Option. |
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11. |
AMENDMENTS. The Board of Directors may from time to time amend, alter, suspend, or discontinue the Plan or alter or amend any and all option agreements granted thereunder; provided, however, that no such action of the Board of Directors may, without approval of the stockholders of the Corporation, alter the provisions of the Plan so as to (a) materially increase the benefits accruing to participants under the Plan; (b) materially increase the number of securities which may be issued under the Plan; (c) materially modify the requirements as to eligibility for participation in the Plan; or (d) decrease the Option Exercise Price of any option exercise agreements, by cancellation and substitution of options or otherwise; and provided, further, that no amendment may, without the consent of the Optionee, affect any then outstanding Stock Options or unexercised portions thereof. In addition, the approval of the Corporation's stockholders shall be sought for any amendment to the Plan or a Stock Option for which the Committee deems stockholder approval necessary in order to comply with Rule 16b-3.” |
5
Exhibit 31.1
CEO’S CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
I, David Harlow, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q of BancFirst Corporation; |
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2. |
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; |
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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; |
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4. |
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 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
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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 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: August 2, 2019 |
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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:
|
1. |
I have reviewed this quarterly report on Form 10-Q of BancFirst Corporation; |
|
2. |
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; |
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4. |
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 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
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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 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: August 2, 2019 |
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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:
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(1) |
The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2019 (the “Form 10-Q”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
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(2) |
The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: August 2, 2019
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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) |
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/s/ Kevin Lawrence |
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Kevin Lawrence |
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Executive Vice President |
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and Chief Financial Officer |
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(Principal Financial Officer) |
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