BancFirst (BANF) 10-Q 2024 Q2 Quarterly report

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, 2024

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.)

100 N. Broadway Ave., Oklahoma City, Oklahoma	73102-8405
(Address of principal executive offices)	(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

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

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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	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 ☒

As of July 31, 2024 there were 33,022,124 shares of the registrant’s Common Stock outstanding.

BancFirst Corporation

Quarterly Report on Form 10-Q

June 30, 2024

Table of Contents

Item	PART I – Financial Information	Page
1.	Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Shareholders’ Equity	4
	Consolidated Statements of Cash Flow	5
	Notes to Consolidated Financial Statements	6
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
3.	Quantitative and Qualitative Disclosure About Market Risk	42
4.	Controls and Procedures	42
	PART II – Other Information
1.	Legal Proceedings	43
1A.	Risk Factors	43
2.	Unregistered Sales of Equity Securities	43
3.	Defaults Upon Senior Securities	43
4.	Mine Safety Disclosures	43
5.	Other Information	43
6.	Exhibits	44
	Signatures	45

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30,			December 31,
	2024			2023
	(unaudited)			(see Note 1)
ASSETS
Cash and due from banks	$	194,273		$	225,462
Interest-bearing deposits with banks		2,299,019			2,172,001
Federal funds sold		1,102			1,316
Debt securities held for investment (fair value: $838 and $1,190, respectively)		838			1,190
Debt securities available for sale at fair value		1,440,527			1,553,905
Loans held for sale		7,408			3,489
Loans held for investment (net of unearned interest)		8,047,448			7,656,645
Allowance for credit losses		(99,626	)		(96,800	)
Loans, net of allowance for credit losses		7,947,822			7,559,845
Premises and equipment, net		285,131			278,594
Other real estate owned		37,823			33,718
Intangible assets, net		14,931			16,704
Goodwill		182,263			182,263
Accrued interest receivable and other assets		326,181			343,555
Total assets	$	12,737,318		$	12,372,042
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	3,815,818		$	3,982,226
Interest-bearing		7,199,784			6,717,896
Total deposits		11,015,602			10,700,122
Short-term borrowings		4,264			3,351
Accrued interest payable and other liabilities		118,831			148,577
Subordinated debt		86,129			86,101
Total liabilities		11,224,826			10,938,151
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: 33,022,124 and 32,933,018, respectively		33,022			32,933
Capital surplus		178,806			174,695
Retained earnings		1,348,905			1,276,305
Accumulated other comprehensive loss, net of tax benefit of $14,938       and $15,473, respectively		(48,241	)		(50,042	)
Total stockholders' equity		1,512,492			1,433,891
Total liabilities and stockholders' equity	$	12,737,318		$	12,372,042

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,
	2024		2023			2024			2023
INTEREST INCOME
Loans, including fees	$	137,710	$	114,612		$	269,836		$	219,008
Securities:
Taxable		8,932		9,408			18,113			18,399
Tax-exempt		18		23			38			30
Federal funds sold		5		81			24			113
Interest-bearing deposits with banks		31,800		26,694			62,097			58,714
Total interest income		178,465		150,818			350,108			296,264
INTEREST EXPENSE
Deposits		67,479		43,732			131,892			78,909
Short-term borrowings		59		129			155			212
Subordinated debt		1,031		1,031			2,061			2,061
Total interest expense		68,569		44,892			134,108			81,182
Net interest income		109,896		105,926			216,000			215,082
Provision for credit losses		3,358		2,824			7,373			5,146
Net interest income after provision for credit losses		106,538		103,102			208,627			209,936
NONINTEREST INCOME
Trust revenue		5,490		4,590			10,578			8,812
Service charges on deposits		17,280		22,268			33,708			43,499
Securities transactions		317		110			50			(103	)
Sales of loans		733		757			1,224			1,361
Insurance commissions		6,668		6,225			16,123			14,966
Cash management		9,149		7,927			17,800			14,661
Gain/(loss) on sale of other assets		55		315			(4	)		794
Other		4,252		5,782			9,365			11,812
Total noninterest income		43,944		47,974			88,844			95,802
NONINTEREST EXPENSE
Salaries and employee benefits		51,928		49,803			103,456			99,055
Occupancy, net		5,233		5,118			10,439			10,101
Depreciation		4,504		4,769			9,060			9,412
Amortization of intangible assets		887		880			1,773			1,760
Data processing services		2,696		2,217			5,312			4,324
Net expense from other real estate owned		1,656		2,889			3,858			5,348
Marketing and business promotion		2,246		1,900			4,502			4,427
Deposit insurance		1,614		1,463			3,052			3,076
Other		14,552		12,071			26,643			23,924
Total noninterest expense		85,316		81,110			168,095			161,427
Income before taxes		65,166		69,966			129,376			144,311
Income tax expense		14,525		14,956			28,401			31,768
Net income	$	50,641	$	55,010		$	100,975		$	112,543
NET INCOME PER COMMON SHARE
Basic	$	1.53	$	1.67		$	3.06		$	3.42
Diluted	$	1.51	$	1.64		$	3.01		$	3.36
OTHER COMPREHENSIVE GAIN/(LOSS)
Unrealized income/(loss) on debt securities, net of tax (expense)/benefit of $(1,263), $4,350, $(535) and $(154), respectively		4,105		(14,091	)		1,801			558
Other comprehensive income/(loss), net of tax (expense)/benefit of $(1,263), $4,350, $(535) and $(154), respectively		4,105		(14,091	)		1,801			558
Comprehensive income	$	54,746	$	40,919		$	102,776		$	113,101

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,
	2024			2023			2024			2023
COMMON STOCK
Issued at beginning of period	$	32,967		$	32,900		$	32,933		$	32,876
Shares issued for stock options		55			39			89			63
Issued at end of period	$	33,022		$	32,939		$	33,022		$	32,939
CAPITAL SURPLUS
Balance at beginning of period	$	176,227		$	170,231		$	174,695		$	169,231
Common stock issued for stock options		1,659			1,296			2,476			1,914
Stock-based compensation arrangements		920			831			1,635			1,213
Balance at end of period	$	178,806		$	172,358		$	178,806		$	172,358
RETAINED EARNINGS
Balance at beginning of period	$	1,312,464		$	1,164,665		$	1,276,305		$	1,120,292
Net income		50,641			55,010			100,975			112,543
Dividends on common stock ($0.43, $0.40, $0.86 and $0.80  per share, respectively)		(14,200	)		(13,176	)		(28,375	)		(26,336	)
Balance at end of period	$	1,348,905		$	1,206,499		$	1,348,905		$	1,206,499
ACCUMULATED OTHER COMPREHENSIVE LOSS
Unrealized (losses)/gains on securities:
Balance at beginning of period	$	(52,346	)	$	(56,914	)	$	(50,042	)	$	(71,563	)
Net change		4,105			(14,091	)		1,801			558
Balance at end of period	$	(48,241	)	$	(71,005	)	$	(48,241	)	$	(71,005	)
Total stockholders’ equity	$	1,512,492		$	1,340,791		$	1,512,492		$	1,340,791

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,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	100,975		$	112,543
Adjustments to reconcile to net cash provided by operating activities:
Provision for credit losses		7,373			5,146
Depreciation and amortization		10,833			11,172
Net amortization of securities premiums and discounts		(627	)		(577	)
Realized securities (gains)/losses		(50	)		103
Gain on sales of loans		(1,224	)		(1,361	)
Cash receipts from the sale of loans originated for sale		110,096			77,758
Cash disbursements for loans originated for sale		(72,791	)		(78,948	)
Deferred income tax benefit		(1,764	)		(1,489	)
Gain on sale of other assets		(1,319	)		(1,061	)
Increase in interest receivable		(3,074	)		(3,387	)
Increase in interest payable		5,314			3,005
Amortization of stock-based compensation arrangements		1,635			1,213
Excess tax benefit from stock-based compensation arrangements		(750	)		(734	)
Other, net		11,848			5,797
Net cash provided by operating activities		166,475			129,180
INVESTING ACTIVITIES
Net decrease/(increase) in federal funds sold		214			(1,631	)
Purchases of available for sale debt securities		(270	)		(94,112	)
Proceeds from maturities, calls and paydowns of held for investment debt securities		352			1,349
Proceeds from maturities, calls and paydowns of available for sale debt securities		116,611			64,036
Purchase of equity securities		(404	)		(294	)
Proceeds from paydowns and sales of equity securities		206			531
Net change in loans		(445,920	)		(357,140	)
Net (payments)/receipts on derivative asset contracts		(22,293	)		11,628
Purchases of premises, equipment and computer software		(16,273	)		(13,016	)
Purchase of tax credits		(2,469	)		(3,813	)
Other, net		8,978			23,302
Net cash used in investing activities		(361,268	)		(369,160	)
FINANCING ACTIVITIES
Net change in deposits		315,480			(499,048	)
Net change in short-term borrowings		913			3,593
Issuance of common stock in connection with stock options, net		2,565			1,977
Cash dividends paid		(28,336	)		(26,310	)
Net cash provided by (used in) financing activities		290,622			(519,788	)
Net increase/(decrease) in cash, due from banks and interest-bearing deposits		95,829			(759,768	)
Cash, due from banks and interest-bearing deposits at the beginning of the period		2,397,463			3,168,910
Cash, due from banks and interest-bearing deposits at the end of the period	$	2,493,292		$	2,409,142
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	128,794		$	78,176
Cash paid during the period for income taxes	$	22,349		$	31,180
Noncash investing and financing activities:
Unpaid common stock dividends declared	$	14,200		$	13,176

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, 2023.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank ("Pegasus"), Worthington Bank ("Worthington") and BancFirst and its subsidiaries ("BancFirst"). The principal operating subsidiaries of BancFirst are BFTower, LLC, BFC-PNC LLC, and BancFirst Agency, Inc. All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.

The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with U.S. GAAP for interim financial information and the instructions for Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). The information contained in the consolidated financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

The unaudited interim consolidated financial statements contained herein reflect all adjustments, which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature.

Reclassifications

Certain items in prior consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for credit losses, income taxes, the fair value of financial instruments and the valuation of assets and liabilities acquired in a business combination, including identifiable intangible assets. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

Recent Accounting Pronouncements

Standards Not Yet Adopted:

In December 2023, the Financial Accounting Standards Board (“FASB“) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company does not expect adoption of the standard to have a material impact on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The amendments are to be applied retrospectively to all periods presented and segment expense categories are required to be based on the categories identified at adoption. The Company is currently evaluating the provisions of this ASU and expects to adopt them for the year ending December 31, 2024. The Company does not expect the adoption to have a significant impact on the Company’s consolidated financial statements.

6

(2) 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, 2024	(Dollars in thousands)
Mortgage backed securities (1)	$	3	$	—	$	—	$	3
States and political subdivisions		335		—		—		335
Other securities		500		—		—		500
Total	$	838	$	—	$	—	$	838
December 31, 2023
Mortgage backed securities (1)	$	5	$	—	$	—	$	5
States and political subdivisions		685		—		—		685
Other securities		500		—		—		500
Total	$	1,190	$	—	$	—	$	1,190

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, 2024	(Dollars in thousands)
U.S. treasuries	$	1,450,915	$	—	$	(60,133	)	$	1,390,782
U.S. federal agencies		9,565		121		(3	)		9,683
Mortgage backed securities (1)		15,647		7		(1,746	)		13,908
States and political subdivisions		10,078		8		(135	)		9,951
Asset backed securities		9,338		43		—			9,381
Other securities		8,163		—		(1,341	)		6,822
Total	$	1,503,706	$	179	$	(63,358	)	$	1,440,527
December 31, 2023
U.S. treasuries	$	1,560,265	$	415	$	(62,635	)	$	1,498,045
U.S. federal agencies		11,631		142		(3	)		11,770
Mortgage backed securities (1)		16,459		13		(1,677	)		14,795
States and political subdivisions		10,108		16		(114	)		10,010
Asset backed securities		12,794		—		(282	)		12,512
Other securities		8,163		—		(1,390	)		6,773
Total	$	1,619,420	$	586	$	(66,101	)	$	1,553,905

(1) Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.

7

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, 2024				December 31, 2023
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in thousands)
Held for Investment
Contractual maturity of debt securities:
Within one year	$	275	$	275	$	350	$	350
After one year but within five years		563		563		840		840
After five years but within ten years		—		—		—		—
After ten years		—		—		—		—
Total	$	838	$	838	$	1,190	$	1,190
Available for Sale
Contractual maturity of debt securities:
Within one year	$	364,890	$	358,962	$	348,318	$	341,645
After one year but within five years		1,097,339		1,043,120		1,223,529		1,167,973
After five years but within ten years		11,071		9,657		10,331		8,851
After ten years		30,406		28,788		37,242		35,436
Total debt securities	$	1,503,706	$	1,440,527	$	1,619,420	$	1,553,905

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, 2024		December 31, 2023
	(Dollars in thousands)
Book value of pledged securities	$	910,357	$	591,324

8

There were no sales of debt securities and therefore no proceeds from sales or realized securities gains or losses on available for sale debt securities for the six months ended June 30, 2024 or June 30, 2023.

Realized gains/losses on debt and equity securities are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.

The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at June 30, 2024 and December 31, 2023 respectively:

			Less than 12 Months				More than 12 Months				Total
	Number of investments		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
			(Dollars in thousands)
June 30, 2024
Available for Sale
U.S. treasuries		62	$	90,084	$	926	$	1,300,697	$	59,207	$	1,390,781	$	60,133
U.S. federal agencies		2		205		2		688		1		893		3
Mortgage backed securities		69		1,188		9		12,455		1,737		13,643		1,746
States and political subdivisions		8		867		3		1,871		132		2,738		135
Other securities		3		—		—		6,822		1,341		6,822		1,341
Total		144	$	92,344	$	940	$	1,322,533	$	62,418	$	1,414,877	$	63,358
December 31, 2023
Available for Sale
U.S. treasuries		68	$	4,838	$	90	$	1,401,669	$	62,545	$	1,406,507	$	62,635
U.S. federal agencies		3		1,100		3		—		—		1,100		3
Mortgage backed securities		74		80		—		13,261		1,677		13,341		1,677
States and political subdivisions		6		306		4		1,847		110		2,153		114
Asset backed securities		1		—		—		12,512		282		12,512		282
Other securities		3		—		—		6,773		1,390		6,773		1,390
Total		155	$	6,324	$	97	$	1,436,062	$	66,004	$	1,442,386	$	66,101

The Company has the ability and intent to hold the debt securities classified as held for investment until they mature, at which time the Company will receive full value for the debt securities. Furthermore, as of June 30, 2024 and December 31, 2023, the Company also had the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. The Company has no intent or requirement to sell before the recovery of the unrealized loss; therefore, no impairment loss was realized in the Company’s consolidated statement of comprehensive income.

9

(3) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans held for investment are summarized by portfolio segment as follows:

	June 30, 2024		December 31, 2023
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied		954,942		960,944
Commercial real estate non-owner occupied		1,604,132		1,486,420
Construction and development < 60 months		680,807		642,643
Construction residential real estate < 60 months		288,900		283,486
Residential real estate first lien		1,335,124		1,258,744
Residential real estate all other		260,036		244,696
Agriculture		432,360		427,139
Commercial non-real estate		1,436,349		1,289,452
Consumer non-real estate		469,084		476,467
Oil and gas		585,714		586,654
Total (1)	$	8,047,448	$	7,656,645
(1) Excludes accrued interest receivable of $42.8 million at June 30, 2024 and $39.4 million at December 31, 2023, that is recorded in accrued interest receivable and other assets.

The Company's loans are currently 84% held by BancFirst and 16% held by Pegasus and Worthington. In addition, approximately 69% of the Company's 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/or securities. The Company’s interest in collateral is secured through filing mortgages and liens, or by possession of the collateral.

The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Other Real Estate Owned and Repossessed Assets and Loan Modifications

The following is a summary of other real estate owned and repossessed assets:

	June 30, 2024		December 31, 2023
	(Dollars in thousands)
Other real estate owned and repossessed assets	$	38,497	$	34,200

As of both June 30, 2024 and December 31, 2023, other real estate owned included a commercial real estate property recorded at approximately $30.7 million and $29.4 million, respectively. The increase in OREO and this commercial real estate property was due to tenant improvements during the six months ended June 30, 2024. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in noninterest expense on the consolidated statements of comprehensive income.

This property had the following rental income and operating expenses for the periods presented.

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Rental income	$	3,085	$	2,778	$	6,026	$	5,468
Operating expense		2,673		2,967		4,923		5,348

During the six months ended June 30, 2024, the Company sold property held in other real estate owned for a total gain of $1.3 million, compared to a total gain of $266,000 in the six months ended June 30, 2023.

10

The Company charges interest on principal balances outstanding on modified loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the six months ended June 30, 2024 was approximately $5.9 million compared to $5.3 million during the year ended December 31, 2023.

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for either the six months ended June 30, 2024 or 2023. In addition, all loans identified as nonaccrual loans have related allowances for credit losses at June 30, 2024 and December 31, 2023, respectively. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.8 million for the six months ended June 30, 2024 and approximately $718,000 for the six months ended June 30, 2023.

Nonaccrual loans guaranteed by government agencies totaled approximately $8.5 million at June 30, 2024 and approximately $6.7 million at December 31, 2023.

The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.

	June 30, 2024		December 31, 2023
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	5,543	$	1,686
Commercial real estate non-owner occupied		3,280		874
Construction and development < 60 months		20,142		800
Construction residential real estate < 60 months		745		638
Residential real estate first lien		3,425		3,336
Residential real estate all other		628		899
Agriculture		2,092		3,662
Commercial non-real estate		5,605		10,101
Consumer non-real estate		685		449
Oil and gas		1,876		2,128
Total	$	44,021	$	24,573

11

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of the Company's loans held for investment:

	Age Analysis of Past Due Loans
	30-59 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, 2024
Real estate:
Commercial real estate owner occupied	$	3,020	$	38	$	5,379	$	8,437	$	946,505	$	954,942	$	532
Commercial real estate non-owner occupied		—		141		1,544		1,685		1,602,447		1,604,132		803
Construction and development < 60 months		405		1,738		831		2,974		677,833		680,807		31
Construction residential real estate < 60 months		229		117		407		753		288,147		288,900		—
Residential real estate first lien		4,929		2,144		2,213		9,286		1,325,838		1,335,124		961
Residential real estate all other		866		152		835		1,853		258,183		260,036		250
Agriculture		1,805		937		1,447		4,189		428,171		432,360		916
Commercial non-real estate		1,857		831		5,256		7,944		1,428,405		1,436,349		587
Consumer non-real estate		3,166		555		495		4,216		464,868		469,084		200
Oil and gas		588		416		—		1,004		584,710		585,714		—
Total	$	16,865	$	7,069	$	18,407	$	42,341	$	8,005,107	$	8,047,448	$	4,280
As of December 31, 2023
Real estate:
Commercial real estate owner occupied	$	1,386	$	26	$	5,598	$	7,010	$	953,934	$	960,944	$	4,377
Commercial real estate non-owner occupied		2,224		7,371		1,786		11,381		1,475,039		1,486,420		913
Construction and development < 60 months		198		158		800		1,156		641,487		642,643		—
Construction residential real estate < 60 months		1,542		206		405		2,153		281,333		283,486		332
Residential real estate first lien		3,879		1,204		1,849		6,932		1,251,812		1,258,744		731
Residential real estate all other		757		190		613		1,560		243,136		244,696		549
Agriculture		1,694		724		1,227		3,645		423,494		427,139		579
Commercial non-real estate		1,501		436		10,028		11,965		1,277,487		1,289,452		1,714
Consumer non-real estate		3,248		1,090		594		4,932		471,535		476,467		347
Oil and gas		—		—		92		92		586,562		586,654		—
Total	$	16,429	$	11,405	$	22,992	$	50,826	$	7,605,819	$	7,656,645	$	9,542

Credit Quality Indicators

The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory categories or any financial reporting definitions. The general characteristics of the risk grades and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2023, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.

12

The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades:

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
As of June 30, 2024
Commercial real estate owner occupied
Grade 1	$	39,257	$	104,695	$	151,859	$	111,308	$	78,999	$	186,219	$	25,667	$	698,004
Grade 2		23,094		34,818		49,139		44,044		21,710		34,604		24,187		231,596
Grade 3		128		7,339		3,574		4,489		939		4,121		2,100		22,690
Grade 4		—		372		21		170		352		1,615		122		2,652
Total commercial real estate owner occupied		62,479		147,224		204,593		160,011		102,000		226,559		52,076		954,942
Commercial real estate non-owner occupied
Grade 1	$	64,168	$	258,439	$	283,026	$	187,391	$	120,052	$	126,177	$	41,093	$	1,080,346
Grade 2		61,660		104,871		126,693		89,290		38,105		71,591		3,122		495,332
Grade 3		8,934		141		13,635		1,690		—		245		—		24,645
Grade 4		185		2,043		643		316		98		524		—		3,809
Total commercial real estate non-owner occupied		134,947		365,494		423,997		278,687		158,255		198,537		44,215		1,604,132
Construction and development < 60 months
Grade 1	$	49,830	$	76,166	$	146,196	$	33,350	$	9,848	$	7,591	$	51,139	$	374,120
Grade 2		64,768		118,553		62,487		8,296		1,590		14,969		10,703		281,366
Grade 3		2,641		1,829		—		354		71		68		19,287		24,250
Grade 4		—		—		831		100		140		—		—		1,071
Total construction and development < 60 months		117,239		196,548		209,514		42,100		11,649		22,628		81,129		680,807
Construction residential real estate < 60 months
Grade 1	$	78,419	$	48,981	$	15,922	$	8,162	$	98	$	546	$	30,001	$	182,129
Grade 2		54,233		33,153		2,447		15		12		—		11,630		101,490
Grade 3		3,503		408		—		—		—		—		396		4,307
Grade 4		568		200		206		—		—		—		—		974
Total construction residential real estate < 60 months		136,723		82,742		18,575		8,177		110		546		42,027		288,900
Residential real estate first lien
Grade 1	$	134,305	$	211,033	$	205,048	$	162,128	$	130,865	$	192,862	$	5,031	$	1,041,272
Grade 2		43,810		65,488		50,368		37,025		25,620		48,645		519		271,475
Grade 3		1,453		2,576		3,098		2,835		1,821		5,562		—		17,345
Grade 4		907		646		312		795		539		1,756		—		4,955
Grade 5		—		77		—		—		—		—		—		77
Total residential real estate first lien		180,475		279,820		258,826		202,783		158,845		248,825		5,550		1,335,124
Residential real estate all other
Grade 1	$	18,801	$	34,325	$	21,028	$	6,512	$	7,196	$	12,957	$	54,939	$	155,758
Grade 2		3,804		5,198		4,467		1,341		1,462		3,918		79,266		99,456
Grade 3		756		344		106		176		295		437		1,507		3,621
Grade 4		—		174		67		—		—		26		934		1,201
Total residential real estate all other		23,361		40,041		25,668		8,029		8,953		17,338		136,646		260,036
Agriculture
Grade 1	$	26,725	$	36,340	$	44,928	$	31,695	$	22,757	$	46,282	$	46,588	$	255,315
Grade 2		23,833		21,355		20,788		16,052		9,606		19,830		39,081		150,545
Grade 3		5,833		8,951		1,119		1,076		2,589		3,072		1,686		24,326
Grade 4		354		886		612		51		5		262		4		2,174
Total Agriculture		56,745		67,532		67,447		48,874		34,957		69,446		87,359		432,360
Commercial non-real estate
Grade 1	$	98,481	$	135,724	$	155,712	$	132,447	$	28,731	$	58,159	$	421,728	$	1,030,982
Grade 2		57,646		94,429		30,313		20,608		5,593		6,885		176,353		391,827
Grade 3		1,471		2,160		2,183		1,035		235		250		2,637		9,971
Grade 4		787		364		793		255		508		116		563		3,386
Grade 5		—		—		—		6		—		177		—		183
Total commercial non-real estate		158,385		232,677		189,001		154,351		35,067		65,587		601,281		1,436,349
Consumer non-real estate
Grade 1	$	105,282	$	153,775	$	77,329	$	40,937	$	11,724	$	6,655	$	12,793	$	408,495
Grade 2		9,876		17,288		10,906		5,582		1,542		1,219		6,427		52,840
Grade 3		1,059		1,839		1,641		1,119		274		276		15		6,223
Grade 4		198		556		314		282		104		68		4		1,526
Total consumer non-real estate		116,415		173,458		90,190		47,920		13,644		8,218		19,239		469,084
Oil and gas
Grade 1	$	76,512	$	63,488	$	5,807	$	26,153	$	5,951	$	3,116	$	269,441	$	450,468
Grade 2		60,737		9,097		5,045		677		374		267		58,161		134,358
Grade 3		29		109		—		183		—		—		—		321
Grade 4		—		—		—		127		—		440		—		567
Total oil and gas		137,278		72,694		10,852		27,140		6,325		3,823		327,602		585,714
Total loans held for investment	$	1,124,047	$	1,658,230	$	1,498,663	$	978,072	$	529,805	$	861,507	$	1,397,124	$	8,047,448

13

The following tables summarize the Company's gross charge-offs by year of origination for the periods indicated:

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Three months ended June 30, 2024
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		1		—		—		—		1
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		2		23		—		2		4		36		—		67
Residential real estate all other
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Agriculture
Current-period gross charge-offs		—		—		6		13		—		—		—		19
Commercial non-real estate
Current-period gross charge-offs		6		155		43		8		—		190		378		780
Consumer non-real estate
Current-period gross charge-offs		21		256		150		28		21		30		4		510
Oil and gas
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Total current-period gross charge-offs	$	29	$	434	$	199	$	52	$	25	$	256	$	382	$	1,377

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Three months ended June 30, 2023
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		2		—		—		—		2
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		—		19		21		—		2		—		42
Residential real estate all other
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Agriculture
Current-period gross charge-offs		—		—		—		301		1		—		—		302
Commercial non-real estate
Current-period gross charge-offs		42		34		1		20		—		5		—		102
Consumer non-real estate
Current-period gross charge-offs		29		186		115		14		28		11		15		398
Oil and gas
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Total current-period gross charge-offs	$	71	$	224	$	135	$	358	$	29	$	18	$	15	$	850

14

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Six months ended June 30, 2024
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	15	$	—	$	—	$	—	$	15
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		12		—		1		1		—		—		14
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months
Current-period gross charge-offs		—		3		—		—		—		—		—		3
Residential real estate first lien
Current-period gross charge-offs		3		23		—		3		4		57		—		90
Residential real estate all other
Current-period gross charge-offs		—		—		—		—		—		2		27		29
Agriculture
Current-period gross charge-offs		—		—		37		13		—		—		—		50
Commercial non-real estate
Current-period gross charge-offs		6		1,156		318		140		12		316		1,886		3,834
Consumer non-real estate
Current-period gross charge-offs		21		500		247		79		34		45		15		941
Oil and gas
Current-period gross charge-offs		—		9		83		—		—		—		—		92
Total current-period gross charge-offs	$	30	$	1,703	$	685	$	251	$	51	$	420	$	1,928	$	5,068

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Six months ended June 30, 2023
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	7	$	1	$	22	$	18	$	—	$	—	$	48
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		—		—		3		—		3
Construction and development < 60 months
Current-period gross charge-offs		—		2		—		2		—		—		—		4
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		—		19		21		—		4		—		44
Residential real estate all other
Current-period gross charge-offs		—		4		19		—		1		4		—		28
Agriculture
Current-period gross charge-offs		—		4		—		317		14		2		—		337
Commercial non-real estate
Current-period gross charge-offs		42		101		63		20		—		52		—		278
Consumer non-real estate
Current-period gross charge-offs		29		262		147		29		37		17		17		538
Oil and gas
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Total current-period gross charge-offs	$	71	$	382	$	249	$	411	$	70	$	82	$	17	$	1,282

15

Allowance for Credit Losses Methodology

The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the current expected credit loss ("CECL") model. The allowance for current expected credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The allowance for credit losses methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The following tables detail activity in the allowance for credit losses on loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Three Months Ended June 30, 2024
Real estate:
Commercial real estate owner occupied	$	7,468	$	—		$	11	$	11		$	(109	)	$	7,370
Commercial real estate non-owner occupied		33,180		(1	)		—		(1	)		688			33,867
Construction and development < 60 months		6,596		—			—		—			184			6,780
Construction residential real estate < 60 months		3,464		—			—		—			55			3,519
Residential real estate first lien		4,923		(67	)		21		(46	)		695			5,572
Residential real estate all other		1,652		—			3		3			74			1,729
Agriculture		6,137		(19	)		5		(14	)		(206	)		5,917
Commercial non-real estate		20,482		(780	)		280		(500	)		1,493			21,475
Consumer non-real estate		4,335		(510	)		58		(452	)		500			4,383
Oil and gas		9,030		—			—		—			(16	)		9,014
Total	$	97,267	$	(1,377	)	$	378	$	(999	)	$	3,358		$	99,626

	Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Three Months Ended June 30, 2023
Real estate:
Commercial real estate owner occupied	$	6,547	$	—		$	3	$	3		$	258		$	6,808
Commercial real estate non-owner occupied		32,120		—			—		—			1,312			33,432
Construction and development < 60 months		3,608		(2	)		3		1			(169	)		3,440
Construction residential real estate < 60 months		3,226		—			—		—			327			3,553
Residential real estate first lien		4,454		(42	)		10		(32	)		333			4,755
Residential real estate all other		1,444		(2	)		1		(1	)		218			1,661
Agriculture		6,268		(302	)		7		(295	)		453			6,426
Commercial non-real estate		25,079		(102	)		127		25			23			25,127
Consumer non-real estate		4,232		(398	)		35		(363	)		475			4,344
Oil and gas		7,782		(2	)		—		(2	)		(406	)		7,374
Total	$	94,760	$	(850	)	$	186	$	(664	)	$	2,824		$	96,920

16

	Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Six Months Ended June 30, 2024
Real estate:
Commercial real estate owner occupied	$	7,483	$	(15	)	$	31	$	16		$	(129	)	$	7,370
Commercial real estate non-owner occupied		33,080		(14	)		—		(14	)		801			33,867
Construction and development < 60 months		3,950		—			—		—			2,830			6,780
Construction residential real estate < 60 months		3,414		(3	)		—		(3	)		108			3,519
Residential real estate first lien		4,914		(90	)		25		(65	)		723			5,572
Residential real estate all other		1,646		(29	)		8		(21	)		104			1,729
Agriculture		6,137		(50	)		17		(33	)		(187	)		5,917
Commercial non-real estate		22,745		(3,834	)		313		(3,521	)		2,251			21,475
Consumer non-real estate		4,401		(941	)		127		(814	)		796			4,383
Oil and gas		9,030		(92	)		—		(92	)		76			9,014
Total	$	96,800	$	(5,068	)	$	521	$	(4,547	)	$	7,373		$	99,626

	Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Six Months Ended June 30, 2023
Real estate:
Commercial real estate owner occupied	$	6,416	$	(48	)	$	52	$	4		$	388		$	6,808
Commercial real estate non-owner occupied		30,190		(3	)		—		(3	)		3,245			33,432
Construction and development < 60 months		3,778		(4	)		6		2			(340	)		3,440
Construction residential real estate < 60 months		3,275		—			—		—			278			3,553
Residential real estate first lien		4,092		(44	)		13		(31	)		694			4,755
Residential real estate all other		1,418		(28	)		3		(25	)		268			1,661
Agriculture		6,217		(337	)		13		(324	)		533			6,426
Commercial non-real estate		25,106		(278	)		149		(129	)		150			25,127
Consumer non-real estate		4,132		(538	)		92		(446	)		658			4,344
Oil and gas		8,104		(2	)		—		(2	)		(728	)		7,374
Total	$	92,728	$	(1,282	)	$	328	$	(954	)	$	5,146		$	96,920

Purchased Credit Deteriorated Loans

The Company has previously purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The Company did not purchase credit-deteriorated loans during the six months ended June 30, 2024 and 2023.

Collateral Dependent Loans

A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the six months ended June 30, 2024 and 2023, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.

17

The following tables summarize collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:

	Collateral Type
	Real Estate		Business Assets		Other Assets		Total		Specific Allocation
	(Dollars in thousands)
As of June 30, 2024
Real estate:
Commercial real estate owner occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied		643		—		—		643		250
Construction and development < 60 months		20,142		—		—		20,142		2,825
Construction residential real estate < 60 months		618		—		—		618		134
Residential real estate first lien		195		—		—		195		66
Residential real estate all other		79		—		—		79		81
Agriculture		1,833		401		14		2,248		1,193
Commercial non-real estate		—		4,140		87		4,227		1,342
Consumer non-real estate		—		—		236		236		133
Oil and gas		—		—		—		—		—
Total collateral-dependent loans held for investment	$	23,510	$	4,541	$	337	$	28,388	$	6,024
	Collateral Type
	Real Estate		Business Assets		Other Assets		Total		Specific Allocation
	(Dollars in thousands)
As of December 31, 2023
Real estate:
Commercial real estate owner occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied		632		—		—		632		250
Construction and development < 60 months		800		—		—		800		225
Construction residential real estate < 60 months		638		—		—		638		134
Residential real estate first lien		189		—		—		189		62
Residential real estate all other		140		—		—		140		140
Agriculture		1,841		593		15		2,449		1,386
Commercial non-real estate		—		6,090		241		6,331		1,867
Consumer non-real estate		—		—		147		147		88
Oil and gas		—		—		—		—		—
Total collateral-dependent loans held for investment	$	4,240	$	6,683	$	403	$	11,326	$	4,152

Non-Cash Transfers from Loans and Premises and Equipment

Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the consolidated statements of cash flow.

Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:

	Six Months Ended June 30,
	2024		2023
	(Dollars in thousands)
Other real estate owned	$	8,995	$	667
Repossessed assets		1,575		946
Total	$	10,570	$	1,613

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(4) INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets as of the date listed:

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Dollars in thousands)
June 30, 2024
Core deposit intangibles	$	33,550	$	(18,741	)	$	14,809
Customer relationship intangibles		3,350		(3,228	)		122
Total	$	36,900	$	(21,969	)	$	14,931
December 31, 2023
Core deposit intangibles	$	33,550	$	(17,027	)	$	16,523
Customer relationship intangibles		3,350		(3,169	)		181
Total	$	36,900	$	(20,196	)	$	16,704

The following is a summary of goodwill by business segment:

	BancFirst Metropolitan Banks		BancFirst Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support		Consolidated
	(Dollars in thousands)
Six months ended June 30, 2024
Balance at beginning and end of period	$	13,767	$	61,420	$	68,855	$	32,133	$	5,464	$	624	$	182,263

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, 2023.

(5) SUBORDINATED DEBT

In January 2004, the Company established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. The Company owns all of the common securities of BFC II. In February 2004, BFC II issued $25 million of aggregate liquidation amount of 7.20% Cumulative Trust Preferred Securities (the “Cumulative Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $1 million in Cumulative Trust Preferred Securities through the execution of an over-allotment option. The Cumulative Trust Preferred Securities qualify as Tier 1 capital under regulatory guidelines. The proceeds from the sale of the Cumulative Trust Preferred Securities and the common securities of BFC II were invested in $26.8 million of 7.20% Junior Subordinated Debentures of the Company. Interest payments on the $26.8 million of 7.20% Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the $26.8 million of 7.20% Junior Subordinated Debentures is March 31, 2034, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Cumulative Trust Preferred Securities represent an undivided interest in the $26.8 million of 7.20% Junior Subordinated Debentures and are guaranteed by the Company. During any deferral period or during any event of default, the Company may not declare or pay any dividends on any of its capital stock. The Cumulative Trust Preferred Securities have been callable at par, in whole or in part, since March 31, 2009.

On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $60 million aggregate principal amount of 3.50% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “Subordinated Notes”) to various institutional accredited investors. The sale of the Subordinated Notes was pursuant to a Subordinated Note Purchase Agreement entered into with each of the investors. The Subordinated Notes qualify as Tier 2 capital under regulatory guidelines. The net proceeds to the Company from the sale of the Subordinated Notes were approximately $59.15 million net of commissions and offering expenses. The Company used the proceeds from the sale of the Subordinated Notes for general corporate purposes. The Subordinated Notes initially bear interest at a fixed rate of 3.50% per annum, from and including June 17, 2021 to but excluding June 30, 2031, payable semi-annually in arrears on June 30 and December 31 of each year, commencing December 31, 2021. Then, from and including June 30, 2031, to but excluding the maturity date, the Subordinated Notes will bear interest at a floating rate equal to the benchmark (initially,

19

three-month term SOFR), reset quarterly, plus a spread of 229 basis points, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Subordinated Notes mature on June 30, 2036.

The Company may, at its option, beginning with the interest payment date of June 30, 2031, and on any scheduled interest payment date thereafter, redeem the Subordinated Notes, in whole or in part. In addition, the Company may redeem all, but not less than all, of the Subordinated Notes at any time upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event” or an “Investment Company Event” (each as defined in the Subordinated Notes). Any such redemption is subject to obtaining the prior approval of the Board of Governors of the Federal Reserve System (or its designee). The redemption price with respect to any such redemption will be equal to 100% of the principal amount of the Subordinated Note, or portion thereof, to be redeemed, plus accrued but unpaid interest, if any, thereon to, but excluding, the redemption date.

(6) STOCK-BASED COMPENSATION

On May 25, 2023, the shareholders of the Company adopted the BancFirst Corporation 2023 Restricted Stock Unit Plan (the "RSU Plan"). The RSU Plan was effective as of June 1, 2023 and for a period of ten years thereafter. The RSU Plan will continue in effect after such ten-year period until all matters relating to the payment of awards and administration of the RSU Plan have been settled. At June 30, 2024 there were 462,175 shares available for future grants. The restricted stock units ("RSU's") vest beginning two years from the date of grant at the rate of 20% per year for five years. The RSUs are settled and distributed as of each vesting date. The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of grant.

The following table is a summary of the activity under the Company's RSU plan.

				Wgtd. Avg.
	Restricted			Grant Date
	Stock Units			Fair Value
Six Months Ended June 30, 2024
Nonvested at December 31, 2023		32,075		$	87.23
Granted		7,250			88.57
Forfeited		(1,500	)		83.61
Nonvested at June 30, 2024		37,825			87.63

The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999. As of June 30, 2024, there are 39,525 shares available for future issuance under the Deferred Stock Compensation Plan. The Deferred Stock Compensation Plan will terminate on December 31, 2030, 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 5,022 and 17,797 shares of common stock distributed from the Deferred Stock Compensation Plan during the six months ended June 30, 2024 and 2023, respectively.

A summary of the accumulated stock units under the Deferred Stock Compensation Plan is as follows:

	June 30, 2024		December 31, 2023
Accumulated stock units		119,115		119,575
Average price	$	42.43	$	40.03

The Company terminated the BancFirst Corporation Stock Option Plan (the “Employee Plan”) on June 1, 2023. The remaining options will continue to vest and are exercisable beginning four years from the date of grant at the rate of 25% per year for four years, and expire no later than the end of fifteen years from the date of grant.

The Company terminated the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “Non-Employee Directors’ Plan”) on June 1, 2023. The remaining options will continue to vest and are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire no later than the end of fifteen years from the date of grant.

20

The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’ Plan:

						Wgtd. Avg.
				Wgtd. Avg.		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Options			Price		Term	Value
	(Dollars in thousands, except option data)
Six Months Ended June 30, 2024
Outstanding at December 31, 2023		1,241,391		$	53.12
Options exercised		(84,084	)		28.80
Options canceled, forfeited, or expired		(12,000	)		91.64
Outstanding at June 30, 2024		1,145,307			54.50	9.57 Yrs.	$	38,022
Exercisable at June 30, 2024		502,932			37.51	6.64 Yrs.	$	25,243

The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’ Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Total intrinsic value of options exercised	$	3,254	$	1,979	$	5,085	$	2,331
Cash received from options exercised		1,714		1,318		2,422		1,539
Tax benefit realized from options exercised		782		475		1,222		560

The Company currently uses newly issued shares for stock option exercises, but reserves the right to use shares purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future.

Although not required or expected, the Company may settle some options or restricted stock units in cash on a limited basis at the discretion of the Company. The Company had no cash settlements during the six months ended June 30, 2024 or 2023.

Stock-based compensation expense is charged to salaries and benefits expense on the Consolidated Statements of Comprehensive Income.

The components of stock-based compensation expense for all share-based compensation plans and related tax benefits are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Stock-based compensation expense	$	920	$	831	$	1,635	$	1,213
Tax benefit		221		200		393		292
Stock-based compensation expense, net of tax	$	699	$	631	$	1,242	$	921

21

The Company will continue to amortize the unearned stock-based compensation expense over the remaining weighted average vesting period of approximately five years for unvested stock options and six years for unvested RSUs. The following table shows the unearned stock-based compensation expense for unvested stock options and unvested RSUs:

	June 30, 2024
	(Dollars in thousands)
Unearned stock-based compensation expense for unvested stock options	$	8,769
Unearned stock-based compensation expense for unvested RSU's		2,940

(7) STOCKHOLDERS’ EQUITY

The Company has adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity. In addition, the SRP may be used to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP is determined by management and approved by the Company’s Executive Committee.

The following table is a summary of the shares under the SRP:

	June 30, 2024
Shares remaining to be repurchased		479,784

22

BancFirst Corporation, BancFirst, Pegasus and Worthington 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 assets, liabilities and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s consolidated financial statements. The Company believes that as of June 30, 2024, BancFirst Corporation, BancFirst, Pegasus and Worthington each 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, 2024:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,548,490	17.22%	$	719,342	8.00%	$	944,136	10.50%	N/A		N/A
BancFirst		1,224,212	16.09%		608,791	8.00%		799,039	10.50%	$	760,989	10.00%
Pegasus		143,683	15.85%		72,538	8.00%		95,206	10.50%		90,672	10.00%
Worthington		53,063	11.85%		35,810	8.00%		47,001	10.50%		44,763	10.00%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,363,539	15.16%	$	404,630	4.50%	$	629,424	7.00%	N/A		N/A
BancFirst		1,119,672	14.71%		342,445	4.50%		532,693	7.00%	$	494,643	6.50%
Pegasus		134,727	14.86%		40,802	4.50%		63,470	7.00%		58,937	6.50%
Worthington		48,955	10.94%		20,143	4.50%		31,334	7.00%		29,096	6.50%
Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,389,539	15.45%	$	539,507	6.00%	$	764,301	8.50%	N/A		N/A
BancFirst		1,139,672	14.98%		456,594	6.00%		646,841	8.50%	$	608,791	8.00%
Pegasus		134,727	14.86%		54,403	6.00%		77,071	8.50%		72,538	8.00%
Worthington		48,955	10.94%		26,858	6.00%		38,048	8.50%		35,810	8.00%
Tier 1 Capital
(to Quarterly Average Assets)-
BancFirst Corporation	$	1,389,539	11.10%	$	500,747	4.00%	N/A		N/A	N/A		N/A
BancFirst		1,139,672	10.69%		426,413	4.00%	N/A		N/A	$	533,017	5.00%
Pegasus		134,727	10.59%		50,900	4.00%	N/A		N/A		63,624	5.00%
Worthington		48,955	8.44%		23,207	4.00%	N/A		N/A		29,008	5.00%

As of June 30, 2024, BancFirst, Pegasus and Worthington were classified by the Federal Reserve as “well capitalized” under the prompt corrective action provisions. The Common Equity Tier 1 Capital of BancFirst Corporation, BancFirst, Pegasus and Worthington includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, the election was made to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1 Capital. Common Equity Tier 1 Capital for BancFirst Corporation, BancFirst, Pegasus and Worthington is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. The Company’s trust preferred securities qualify as Tier 1 capital and its Subordinated Notes qualify as Tier 2 capital. The Company's Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. BancFirst, Pegasus and Worthington have had no events or conditions that management believes would materially change their category under capital requirements existing as of the report dates.

23

(8) NET INCOME PER COMMON SHARE

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands, except per share data)
(Numerator)
Income available to common stockholders	$	50,641	$	55,010	$	100,975	$	112,543
(Denominator)
Weighted average shares outstanding for basic earnings per common share		33,001,180		32,920,497		32,974,582		32,906,753
Dilutive effect of stock compensation		523,881		546,757		545,665		559,178
Weighted-average shares outstanding for diluted earnings per common share		33,525,061		33,467,254		33,520,247		33,465,931
Basic earnings per share	$	1.53	$	1.67	$	3.06	$	3.42
Diluted earnings per share	$	1.51	$	1.64	$	3.01	$	3.36

The following table shows the number of options and RSU's that were excluded from the computation of diluted net income per common share for each period because they were anti-dilutive for the period:

	Shares
Three Months Ended June 30, 2024		260,548
Three Months Ended June 30, 2023		305,407
Six Months Ended June 30, 2024		262,251
Six Months Ended June 30, 2023		307,608

(9) FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date.

FASB 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 judgment or estimation. This category includes certain collaterally dependent 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.

24

Debt Securities Available for Sale

Debt securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other debt securities available for sale including U.S. federal agencies, registered mortgage backed debt securities and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and a bond’s terms and conditions, among other things. The Company also invests in private label mortgage backed debt securities for which observable information is not readily available. These debt securities are reported at fair value utilizing Level 3 inputs. For these debt securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors. Discount rates are primarily based on reference to interest rate spreads on comparable debt securities of similar duration and credit rating as determined by the nationally recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar debt securities.

The Company reviews the prices for Level 1 and Level 2 debt securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio debt securities that are esoteric or that have complicated structures. The Company’s portfolio primarily consists of traditional investments including U.S. Treasury obligations, federal agency mortgage pass-through debt securities, general obligation municipal bonds and municipal revenue bonds. Pricing for such instruments is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters for pricing mentioned in the preceding paragraph adjusted for the specific issue. Periodically, the Company will validate prices supplied by the independent pricing service by comparison to prices obtained from third party sources.

Derivatives

Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer and market quotations to value its oil and gas swaps and options. The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation models.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of the periods presented, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(Dollars in thousands)
June 30, 2024
Debt securities available for sale:
U.S. Treasury	$	1,390,782	$	—	$	—	$	1,390,782
U.S. federal agencies		—		9,683		—		9,683
Mortgage-backed securities		—		13,908		—		13,908
States and political subdivisions		—		9,801		150		9,951
Asset backed securities		—		9,381		—		9,381
Other debt securities		—		6,822		—		6,822
Derivative assets		—		15,239		—		15,239
Derivative liabilities		—		13,420		—		13,420
December 31, 2023
Debt securities available for sale:
U.S. Treasury	$	1,498,045	$	—	$	—	$	1,498,045
U.S. federal agencies		—		11,770		—		11,770
Mortgage-backed securities		—		14,795		—		14,795
States and political subdivisions		—		9,830		180		10,010
Asset backed securities		—		12,512		—		12,512
Other debt securities				6,773				6,773
Derivative assets		—		41,099		—		41,099
Derivative liabilities		—		39,176		—		39,176

25

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,
	2024			2023
	(Dollars in thousands)
Balance at the beginning of the year	$	180		$	454
Transfers to level 2		—			(244	)
Settlements		(30	)		(30	)
Balance at the end of the period	$	150		$	180

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 six months ended June 30, 2024, the Company did not transfer any debt securities. During the year ended December 31, 2023, the Company transferred debt securities from Level 3 to Level 2 due to a review of the pricing models that determined some state and political subdivision securities to be Level 2.

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; the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities are reported at fair value utilizing Level 3 inputs.

The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income.

Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. When the Company determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. In no case does the fair value of a collateral dependent loan exceed the fair value of the underlying collateral. The collateral dependent loans are adjusted to fair value through a specific allocation of the allowance for credit losses or a direct charge-down of the loan.

Repossessed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible credit losses based upon the fair value of the repossessed asset.

Other real estate owned is revalued at fair value subsequent to initial recognition, with any losses recognized in net expense from other real estate owned.

The following table summarizes assets measured at fair value on a nonrecurring basis during the period presented. These nonrecurring fair values do not represent all assets, only those assets that have been adjusted during the reporting period:

	Total Fair Value
	Level 3
	(Dollars in thousands)
As of and for the Year-to-date Period Ended June 30, 2024
Equity securities	$	13,331
Collateral dependent loans		230
Repossessed assets		657
Other real estate owned		6,838
As of and for the Year-to-date Period Ended December 31, 2023
Equity securities	$	13,144
Collateral dependent loans		1,894
Repossessed assets		474
Other real estate owned		31,773

26

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 are used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents Include: Cash and Due from Banks and Interest-Bearing Deposits with Banks

The carrying amount of these short-term instruments is based on a reasonable estimate of fair value.

Federal Funds Sold

The carrying amount of these short-term instruments is a reasonable estimate of fair value.

Debt Securities Held for Investment

For debt securities held for investment, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar debt securities making adjustments for credit or liquidity if applicable.

Loans Held For Sale

The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank, allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 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 Held For Investment

To determine the fair value of loans held for investment, the Company uses an exit price calculation, which takes into account factors such as liquidity, credit and the nonperformance risk of loans. For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair values of other types of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits

The fair values of transaction and savings accounts are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using the rates currently offered for deposits of similar remaining maturities.

Short-Term Borrowings

The amounts payable on these short-term instruments are reasonable estimates of fair value.

Subordinated Debt

The fair values of subordinated debt are estimated using the rates that would be charged for subordinated debt of similar remaining maturities.

Loan Commitments and Letters of Credit

The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair values of letters of credit are based on fees currently charged for similar agreements.

27

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, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
FINANCIAL ASSETS
Level 2 inputs:
Cash and cash equivalents	$	2,493,292	$	2,493,292	$	2,397,463	$	2,397,463
Federal funds sold		1,102		1,102	$	1,316		1,316
Debt securities held for investment		3		3		5		5
Loans held for sale		7,408		7,408		3,489		3,489
Level 3 inputs:
Debt securities held for investment		835		835		1,185		1,185
Loans, net of allowance for credit losses		7,947,822		8,692,589		7,559,845		7,356,768
FINANCIAL LIABILITIES
Level 2 inputs:
Deposits		11,015,602		10,511,836		10,700,122		10,413,348
Short-term borrowings		4,264		4,264		3,351		3,351
Subordinated debt		86,129		77,459		86,101		79,271
OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
Loan commitments				4,510				4,875
Letters of credit				671				637

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. In addition, the Company has no non-financial liabilities measured at fair value on a nonrecurring basis. Non-financial assets measured at fair value on a nonrecurring basis include intangible assets. The intangible assets are evaluated at least annually for impairment. The overall levels of non-financial assets measured at fair value on a nonrecurring basis were not considered to be significant to the Company at June 30, 2024 or December 31, 2023.

28

(10) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, to mitigate the exposure to fluctuations in oil and gas prices, the Company simultaneously enters into an offsetting contract with a counterparty. These derivatives are not designated as hedged instruments and are recorded on the Company's consolidated balance sheet at fair value and are included in other assets. The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices. At June 30, 2024, the Company had a margin asset included in other assets in the amount of $7.2 million. At December 31, 2023, the Company had a margin liability in other liabilities in the amount of $15.5 million.

The Company utilizes dealer quotations and observable market data inputs to substantiate internal valuation models. The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table:

		June 30, 2024						December 31, 2023
Oil and Natural Gas Swaps and Options	Notional Units	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
		(Notional amounts and dollars in thousands)
Oil
Derivative assets	Barrels		3,866		$	4,033			3,896		$	20,567
Derivative liabilities	Barrels		(3,866	)		(3,097	)		(3,896	)		(19,512	)
Gas/Natural Gas Liquids
Derivative assets	MMBTUs/Gallons		39,502			11,206			46,140			20,532
Derivative liabilities	MMBTUs/Gallons		(39,502	)		(10,323	)		(46,140	)		(19,664	)
Total Fair Value	Included in
Derivative assets	Other assets					15,239						41,099
Derivative liabilities	Other liabilities					(13,420	)					(39,176	)

The following table is a summary of the Company's recognized income related to the activity, which was included in other noninterest income:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)				(Dollars in thousands)
Derivative income	$	94	$	260	$	197	$	349

The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by the market price movements. The Company's share of total profit is approximately 35%.

Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor's) and monitoring market information.

The following table is a summary of the Company's net credit exposure relating to oil and gas swaps and options with bank counterparties:

	June 30, 2024		December 31, 2023
	(Dollars in thousands)
Credit exposure	$	7,134	$	39,527

29

Balance Sheet Offsetting

Derivatives may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with upstream financial institution counterparties and bank customers are generally executed under International Swaps and Derivative Association ("ISDA") master agreements, which include "right of set-off" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset such financial instruments for financial reporting purposes.

(11) SEGMENT INFORMATION

The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The six principal business units are BancFirst metropolitan banks, BancFirst community banks, Pegasus, Worthington, other financial services and executive, operations and support. BancFirst metropolitan banks, BancFirst community banks, Pegasus and Worthington offer traditional banking products such as commercial and retail lending and a full line of deposit accounts. BancFirst metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. BancFirst community banks consist of banking locations in communities in Oklahoma outside the Oklahoma City and Tulsa metropolitan areas. Pegasus consists of banking locations in the Dallas metropolitan area. Worthington consists of banking locations in the Arlington, Fort Worth and Denton Texas. Other financial services are specialty product business units including guaranteed small business lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units.

The results of operations and selected financial information for the six business units are as follows:

	BancFirst Metropolitan Banks		BancFirst Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support		Eliminations			Consolidated
	(Dollars in thousands)
Three Months Ended June 30, 2024
Net interest income	$	29,139	$	61,710	$	11,363	$	4,462	$	1,103	$	2,119	$	—		$	109,896
Noninterest income		5,562		16,886		339		250		13,513		58,064		(50,670	)		43,944
Income before taxes		21,209		42,267		6,112		744		4,139		41,225		(50,530	)		65,166
Three Months Ended June 30, 2023
Net interest income	$	29,269	$	57,617	$	13,509	$	4,123	$	1,058	$	350	$	—		$	105,926
Noninterest income		7,090		19,986		467		255		12,350		63,688		(55,862	)		47,974
Income before taxes		21,588		43,184		9,857		791		4,298		45,925		(55,677	)		69,966
Six Months Ended June 30, 2024
Net interest income	$	57,332	$	121,721	$	22,230	$	8,851	$	2,122	$	3,744	$	—		$	216,000
Noninterest income		10,731		32,804		659		471		28,676		116,492		(100,989	)		88,844
Income before taxes		43,540		81,059		9,257		1,413		10,474		84,296		(100,663	)		129,376
Six Months Ended June 30, 2023
Net interest income	$	60,008	$	115,302	$	28,660	$	8,747	$	2,000	$	365	$	—		$	215,082
Noninterest income		13,177		39,518		681		534		26,522		129,831		(114,461	)		95,802
Income before taxes		44,898		86,783		19,501		2,421		10,462		94,342		(114,096	)		144,311
Total Assets:
June 30, 2024	$	3,365,250	$	7,489,606	$	1,360,612	$	622,902	$	121,308	$	1,392,169	$	(1,614,529	)	$	12,737,318
December 31, 2023		3,598,888		7,012,905		1,280,618		600,364		121,601		1,307,714		(1,550,048	)		12,372,042

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.

30

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

The following discussion and analysis of our financial condition as of June 30, 2024 and December 31, 2023 and results of operations for the three and six months ended June 30, 2024 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2023, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the 2023 Form 10-K, and "Item 1A, Risk Factors" in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis.

FORWARD LOOKING STATEMENTS

The Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management’s current expectations or forecasts of future events. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions; the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•

Potential impacts of the adverse developments in the banking industry driven by high-profile bank failures, including impacts on customer confidence, demand deposit outflows and the regulatory response thereto.

•

Deterioration in the market for commercial office property could have an adverse effect on the value of the Company's other real estate owned as well as commercial office collateral for the Company's commercial real estate loans.

•

Political pressures could further limit our ability to charge NSF and overdraft fees.

•

A continuing shift in deposit mix could negatively impact net interest margin.

•

Changes in interest rates.

•

The increased time, effort and noninterest expense related to ongoing and increased regulations from the Federal Reserve, the Consumer Financial Protection Bureau and the Securities and Exchange Commission, including requirements related to environmental, social and governance issues and climate disclosures.

•

Local, regional, national and international economic conditions and the impact they may have on the Company and its customers.

•

Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.

•

Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations.

•

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, including the impact of rising interest rates.

•

Technological changes.

•

Cyber threats.

•

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.

31

•

The Company’s success at managing the risks involved in the foregoing items.

Actual results may differ materially from forward-looking statements.

SUMMARY

The Company’s net income for the second quarter of 2024 was $50.6 million, compared to $55.0 million for the second quarter of 2023. Diluted net income per common share was $1.51 and $1.64 for the second quarter of 2024 and 2023, respectively.

The Company’s net interest income for the second quarter of 2024 increased to $109.9 million from $105.9 million for the second quarter of 2023. Higher loan volume was the primary driver of the change in net interest income, which was partially offset by the impact of the shifting mix between interest-bearing and noninterest-bearing deposits. Net interest margin for the second quarter of 2024 was 3.76% compared to 3.87% for the second quarter of 2023. For the second quarter of 2024, the Company recorded a provision for credit losses of $3.4 million compared to $2.8 million for the second quarter of 2023.

Noninterest income for the second quarter of 2024 totaled $43.9 million compared to $48.0 million for the second quarter of 2023. The decrease in noninterest income was primarily due to an approximate $5.7 million reduction of interchange fees related to the impact of the Durbin Amendment. Trust revenue, treasury income, sweep fees and insurance commissions each increased when compared to second quarter last year.

Noninterest expense for the second quarter of 2024 increased to $85.3 million compared to $81.1 million for the second quarter of 2023. The increase in noninterest expense was primarily related to growth in salaries and employee benefits of $2.1 million.

The Company’s effective tax rate was 22.3% for the second quarter of 2024 compared to 21.4% for the second quarter of 2023.

At June 30, 2024, the Company’s total assets were $12.7 billion, an increase of $365.3 million from December 31, 2023. Loans grew $394.7 million from December 31, 2023, totaling $8.1 billion at June 30, 2024. Deposits totaled $11.0 billion, an increase of $315.5 million from December 31, 2023. Off-balance-sheet sweep accounts totaled $4.5 billion at June 30, 2024, up $153.9 million from December 31, 2023. The Company’s total stockholders’ equity at June 30, 2024 was $1.5 billion, an increase of $78.6 million over December 31, 2023.

The Company’s nonaccrual loans totaled $44.0 million, representing 0.55% of total loans at June 30, 2024 compared to 0.32% at year-end 2023. The allowance for credit losses to total loans was 1.24% at June 30, 2024, compared to 1.26% at the end of 2023. Net charge-offs were $1.0 million for the second quarter of 2024 compared to $664,000 for the second quarter of 2023.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See Note (1) of the Notes to the Consolidated Financial Statements for disclosures regarding recently issued accounting pronouncements since December 31, 2023, the date of its most recent annual report to stockholders.

SEGMENT INFORMATION

See Note (11) of the Notes to the Consolidated Financial Statements for disclosures regarding business segments.

32

RESULTS OF OPERATIONS

Average Balances, Income, Expenses and Rates

The following table presents certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were $5.5 million for the three months ended June 30, 2024 compared to $5.7 million for the three months ended June 30, 2023. Loan fees included in interest income were $10.9 million for the six months ended June 30, 2024 compared to $11.3 million for the six months ended June 30, 2023.

BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)
Taxable Equivalent Basis
(Dollars in thousands)
	Three Months Ended June 30,
	2024								2023
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans (1)	$	7,912,469		$	137,846		6.99	%	$	7,247,283		$	114,708		6.35	%
Securities – taxable		1,488,850			8,932		2.41			1,604,422			9,408		2.35
Securities – tax exempt		2,408			23		3.79			3,251			29		3.59
Federal funds sold and interest-bearing deposits with banks		2,322,951			31,805		5.49			2,131,325			26,775		5.04
Total earning assets		11,726,678			178,606		6.11			10,986,281			150,920		5.51
Nonearning assets:
Cash and due from banks		203,664								200,165
Interest receivable and other assets		808,283								820,731
Allowance for credit losses		(97,935	)							(95,887	)
Total nonearning assets		914,012								925,009
Total assets	$	12,640,690							$	11,911,290
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Money market and interest-bearing checking deposits	$	4,920,793		$	45,296		3.69	%	$	4,207,288		$	32,673		3.11	%
Savings deposits		1,076,338			9,222		3.44			1,092,840			6,631		2.43
Time deposits		1,134,460			12,961		4.58			747,101			4,428		2.38
Short-term borrowings		4,593			59		5.14			10,211			129		5.04
Subordinated debt		86,120			1,031		4.80			86,063			1,031		4.81
Total interest-bearing liabilities		7,222,304			68,569		3.81			6,143,503			44,892		2.93
Interest-free funds:
Noninterest-bearing deposits		3,819,196								4,328,005
Interest payable and other liabilities		119,175								109,732
Stockholders’ equity		1,480,015								1,330,050
Total interest free funds		5,418,386								5,767,787
Total liabilities and stockholders’ equity	$	12,640,690							$	11,911,290
Net interest income				$	110,037							$	106,028
Net interest spread							2.30	%							2.58	%
Effect of interest free funds							1.46	%							1.29	%
Net interest margin							3.76	%							3.87	%

33

BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)
Taxable Equivalent Basis
(Dollars in thousands)
	Six Months Ended June 30,
	2024								2023
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans (1)	$	7,821,611		$	270,095		6.93	%	$	7,127,174		$	219,189		6.20	%
Debt securities – taxable		1,523,328			18,113		2.38			1,588,439			18,399		2.34
Debt securities – tax exempt		2,525			48		3.77			3,366			38		2.29
Federal funds sold and interest-bearing deposits with banks		2,267,869			62,121		5.49			2,463,587			58,827		4.82
Total earning assets		11,615,333			350,377		6.05			11,182,566			296,453		5.35
Nonearning assets:
Cash and due from banks		202,982								209,115
Interest receivable and other assets		806,429								808,094
Allowance for credit losses		(97,498	)							(94,609	)
Total nonearning assets		911,913								922,600
Total assets	$	12,527,246							$	12,105,166
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Money market and interest-bearing checking deposits	$	4,867,783		$	89,513		3.69	%	$	4,211,766		$	59,540		2.85	%
Savings deposits		1,066,532			18,225		3.43			1,113,821			11,887		2.15
Time deposits		1,080,750			24,154		4.48			726,558			7,482		2.08
Short-term borrowings		6,306			155		4.92			8,537			212		5.00
Subordinated debt		86,113			2,061		4.80			86,056			2,061		4.83
Total interest-bearing liabilities		7,107,484			134,108		3.78			6,146,738			81,182		2.66
Interest-free funds:
Noninterest-bearing deposits		3,831,283								4,561,214
Interest payable and other liabilities		125,536								94,817
Stockholders’ equity		1,462,943								1,302,397
Total interest free funds		5,419,762								5,958,428
Total liabilities and stockholders’ equity	$	12,527,246							$	12,105,166
Net interest income				$	216,269							$	215,271
Net interest spread							2.27	%							2.69	%
Effect of interest free funds							1.46	%							1.19	%
Net interest margin							3.73	%							3.88	%

34

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,
	2024			2023			2024			2023
Income Statement Data
Net interest income	$	109,896		$	105,926		$	216,000		$	215,082
Provision for credit losses		3,358			2,824			7,373			5,146
Securities transactions		317			110			50			(103	)
Total noninterest income		43,944			47,974			88,844			95,802
Salaries and employee benefits		51,928			49,803			103,456			99,055
Total noninterest expense		85,316			81,110			168,095			161,427
Net income		50,641			55,010			100,975			112,543
Per Common Share Data
Net income – basic	$	1.53		$	1.67		$	3.06		$	3.42
Net income – diluted		1.51			1.64			3.01			3.36
Cash dividends		0.43			0.40			0.86			0.80
Performance Data
Return on average assets		1.61	%		1.85	%		1.62	%		1.87	%
Return on average stockholders’ equity		13.72			16.59			13.84			17.43
Cash dividend payout ratio		28.10			23.95			28.10			23.39
Net interest spread		2.30			2.58			2.27			2.69
Net interest margin		3.76			3.87			3.73			3.88
Efficiency ratio		55.46			52.70			55.14			51.93
Net charge-offs to average loans		0.01			0.01			0.06			0.01

Net Interest Income

For the three months ended June 30, 2024, net interest income, which is the Company’s principal source of operating revenue, increased $4.0 million or 3.7% compared to the three months ended June 30, 2023. Higher loan volume was the primary driver of the change in net interest income, which was partially offset by the impact of the shifting mix between interest-bearing and noninterest-bearing deposits. 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 2024 decreased compared to the second quarter of 2023.

Net interest income for the six months ended June 30, 2024 increased $918,000 or 0.4% compared to the six months ended June 30, 2023. Higher loan volume was the primary driver to the increase. The Company’s net interest margin for the six months ended June 30, 2024 decreased compared to the six months ended June 30, 2023.

35

Changes in the volume of earning assets and interest-bearing liabilities and changes in interest rates, determine the changes in net interest income. The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income.

VOLUME/RATE ANALYSIS

Taxable Equivalent Basis

The following table presents the change in net interest income for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

	Total			Due to Volume(1)			Due to Rate
	(Dollars in thousands)
INCREASE (DECREASE)
Interest Income:
Loans	$	23,138		$	10,679		$	12,459
Securities—taxable		(476	)		(646	)		170
Securities—tax exempt		(6	)		(7	)		1
Federal funds sold and interest-bearing deposits with banks		5,030			2,935			2,095
Total interest income		27,686			12,961			14,725
Interest Expense:
Money market and interest-bearing checking deposits		12,623			6,439			6,184
Savings deposits		2,591			(102	)		2,693
Time deposits		8,533			3,055			5,478
Short-term borrowings		(70	)		(81	)		11
Subordinated debt		—			1			(1	)
Total interest expense		23,677			9,312			14,365
Net interest income	$	4,009		$	3,649		$	360
(1) The effects of changes in the mix of earning assets and interest-bearing liabilities have been combined with the changes due to volume.

The following table presents the change in net interest income for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

	Total			Due to Volume(1)			Due to Rate
	(Dollars in thousands)
INCREASE (DECREASE)
Interest Income:
Loans	$	50,906		$	22,966		$	27,940
Securities—taxable		(286	)		(611	)		325
Securities—tax exempt		10			(9	)		19
Federal funds sold and interest-bearing deposits with banks		3,294			(3,946	)		7,240
Total interest income		53,924			18,400			35,524
Interest Expense:
Money market and interest-bearing checking deposits		29,973			11,895			18,078
Savings deposits		6,338			(441	)		6,779
Time deposits		16,672			4,535			12,137
Short-term borrowings		(57	)		(73	)		16
Subordinated debt		—			12			(12	)
Total interest expense		52,926			15,928			36,998
Net interest income	$	998		$	2,472		$	(1,474	)
(1) The effects of changes in the mix of earning assets and interest-bearing liabilities have been combined with the changes due to volume.

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Provision for Credit Losses

The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change which could affect the amount of future provisions for credit losses.

The increased provision for credit losses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to loan growth. Net loan charge-offs were $1.0 million for the second quarter of 2024 compared to net loan charge-offs of $664,000 for the second quarter of 2023.

The increased provision for credit losses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to loan growth. Net loan charge-offs were $4.5 million for the six months ended June 30, 2024, compared to $954,000 for the same period of the prior year.

Noninterest Income

Noninterest income decreased by $4.0 million for the second quarter of 2024 compared to the second quarter of 2023. The decrease in noninterest income was primarily due to an approximate $5.7 million reduction of interchange fees related to the impact of the Durbin Amendment. Trust revenue, treasury income, sweep fees and insurance commissions each increased when compared to last year.

Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $7.3 million and $6.6 million for the three months ended June 30, 2024 and 2023, respectively. This represents 16.6% and 13.8% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card usage and interchange fees totaling $6.8 million and $12.4 million during the three months ended June 30, 2024 and 2023, respectively. This represents 15.4% and 25.9% of the Company’s noninterest income for the respective periods.

Noninterest income decreased by $7.0 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in noninterest income was primarily due to an approximate $10.9 million reduction of interchange fees related to the impact of the Durbin Amendment. Trust revenue, treasury income, sweep fees and insurance commissions each increased when compared to last year.

Noninterest income included NSF and overdraft fees totaling $14.4 million and $13.1 million during the six months ended June 30, 2024 and 2023, respectively. This represents 16.2% and 13.7% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card usage and interchange fees totaling $13.3 million and $24.4 million during the six months ended June 30, 2024 and 2023, respectively. This represents 15.0% and 25.5% of the Company’s noninterest income for the respective periods.

The Company is subject to political pressures that could limit our ability to charge for NSF and overdraft fees. Over the last few years the Company lowered the rates charged on NSF and overdraft fees. Also, the Company became subject to the reduced interchange fees under the Durbin Amendment effective July 1, 2023. Consequently, the Company's interchange fee revenue was reduced by approximately $11.2 million in the last half of 2023 and $10.9 million in the first half of 2024.

Noninterest Expense

Noninterest expense increased by $4.2 million for second quarter of 2024 compared to the second quarter of 2023. The increase in noninterest expenses was primarily related to growth in salaries and employee benefits of $2.1 million.

For the six months ended June 30, 2024, noninterest expense increased by $6.7 million compared to the six months ended June 30, 2023. Higher noninterest expenses in 2024 was primarily related to growth in salaries and employee benefits of $4.4 million.

Income Taxes

The Company’s effective tax rate was 22.3% for the second quarter of 2024, compared to 21.4% for the second quarter of 2023.

The Company’s effective tax rate was 22.0% for the first six months of 2024 and 2023.

The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible expenses, federal and state tax credits and state tax expense.

37

FINANCIAL POSITION

BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
	June 30,			December 31,
	2024			2023
	(unaudited)
Balance Sheet Data
Total assets	$	12,737,318		$	12,372,042
Total loans (net of unearned interest)		8,054,856			7,660,134
Allowance for credit losses		99,626			96,800
Debt securities		1,441,365			1,555,095
Deposits		11,015,602			10,700,122
Stockholders' equity		1,512,492			1,433,891
Book value per share		45.80			43.54
Tangible book value per share (non-GAAP)(1)		39.83			37.50
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)
Stockholders' equity	$	1,512,492		$	1,433,891
Less goodwill		182,263			182,263
Less intangible assets, net		14,931			16,704
Tangible stockholders' equity (non-GAAP)	$	1,315,298		$	1,234,924
Common shares outstanding		33,022,124			32,933,018
Tangible book value per share (non-GAAP)	$	39.83		$	37.50
Selected Financial Ratios
Balance Sheet Ratios:
Average loans to deposits (year-to-date)		72.11	%		68.87	%
Average earning assets to total assets (year-to-date)		92.72			92.39
Average stockholders’ equity to average assets (year-to-date)		11.68			11.03
Asset Quality Data
Loans past due 90 days and still accruing	$	4,280		$	9,542
Nonaccrual loans (3)		44,021			24,573
Other real estate owned and repossessed assets		38,497			34,200
Asset Quality Ratios:
Nonaccrual loans to total loans		0.55	%		0.32	%
Allowance for credit losses to total loans		1.24			1.26
Allowance for credit losses to nonaccrual loans		226.32			393.92
(1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table.
(2) Tangible book value per common share is stockholders’ equity less goodwill and intangible assets, net, divided by common shares outstanding. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of the Company. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(3) Government agencies guaranteed approximately $8.5 million of nonaccrual loans at June 30, 2024.

Cash and Due from Banks, Federal Funds Sold and Interest-Bearing Deposits with Banks

The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increased by $95.6 million or 4.0%, to $2.5 billion from December 31, 2023 to June 30, 2024. The increase was related to an increase of interest-bearing deposits.

Securities

At June 30, 2024, total debt securities decreased $113.7 million, or 7.3% compared to December 31, 2023. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized loss on debt securities available for sale, before taxes, was $63.2 million at June 30, 2024, compared to a net unrealized loss of $65.5 million at December 31, 2023. These unrealized losses, net of income tax, are included in the Company’s stockholders’ equity as accumulated other comprehensive loss in the amounts of $48.2 million at June 30, 2024 and $50.0 million at December 31, 2023. During the six months ended June 30, 2024, the Company purchased $270,000 of debt securities and did not sell any debt securities.

38

See Note (2) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s securities.

Loans

At June 30, 2024, total loans increased $394.7 million or 5.2% compared to December 31, 2023 as a result of internal loan growth. The internal loan growth was primarily from the Company's Oklahoma subsidiary BancFirst, with loans essentially flat for the Company's Texas subsidiaries, Pegasus and Worthington.

See Note (3) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s loan portfolio segments.

Allowance for Credit Losses

The allowance for credit losses to total loans was 1.24% at June 30, 2024 compared to 1.26% at December 31, 2023. The overall credit quality of the Company's loan portfolio has remained strong. If unforeseen adverse changes occur in the national or local economy, or in the credit markets, it would be reasonable to expect that the allowance for credit losses would increase in future periods.

Nonaccrual Loans

Nonaccrual loans totaled $44.0 million at June 30, 2024 compared to $24.6 million at December 31, 2023. The level of the Company's nonaccrual loans remains low. The Company’s nonaccrual loans are primarily comprised of construction and development real estate loans, commercial real estate loans and commercial non-real estate loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.8 million for the six months ended June 30, 2024 and $718,000 for the six months ended June 30, 2023. Only a small amount of this interest is expected to be ultimately collected. Approximately $8.5 million of nonaccrual loans were guaranteed by government agencies at June 30, 2024.

The classification of a loan as nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although, in an economic downturn, the Company’s experience has been that the risk of loss is heightened. The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses. The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions. The allowance for credit losses as a percentage of nonaccrual loans is shown in the table above.

Modified Loans

As of January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2022-02, which eliminated the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, requires that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the period ended June 30, 2024 was approximately $5.9 million compared to $5.3 million during the year ended December 31, 2023.

Other Real Estate Owned and Repossessed Assets

Other real estate owned (OREO) and repossessed assets totaled $38.5 million at June 30, 2024 compared to $34.2 million at December 31, 2023. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense.

OREO included a larger commercial real estate property recorded at $30.7 million at June 30, 2024 and $29.4 million at December 31, 2023. During the period ended June 30, 2024, the Company made $1.3 million of tenant improvements to this property, which contributed to the increase of total OREO. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income.

This property had the following rental income and operating expenses for the periods presented:

39

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Rental income	$	3,085	$	2,778	$	6,026	$	5,468
Operating expense		2,673		2,967		4,923		5,348

The Company's total rental income and operating expenses from OREO are presented in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	(Dollars in thousands)
Rental income	$	3,083	$	2,895	$	6,085	$	5,716
Operating expense		2,802		3,058		5,131		5,614

Intangible Assets, Goodwill and Other Assets

Identifiable intangible assets and goodwill totaled $197.2 million and $199.0 million at June 30, 2024 and December 31, 2023, respectively.

Other assets includes the cash surrender value of key-man life insurance policies totaling $84.1 million and $84.4 million at June 30, 2024 and December 31, 2023, respectively.

Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $15.2 million at June 30, 2024 and $41.1 million at December 31, 2023. They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity. At June 30, 2024, the Company had a margin asset included in other assets in the amount of $7.2 million. At December 31, 2023, the Company had a margin liability included in other liabilities in the amount of $15.5 million. See Note (10) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.

Equity securities are reported in other assets on the Company’s consolidated balance sheet. The Company invests in equity securities without readily determinable fair values. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $13.3 million at June 30, 2024 and $13.1 million at December 31, 2023. The Company reviews its portfolio of equity securities for impairment at least quarterly.

Low-Income Housing and New Market Tax Credit Investments

During 2024, there have not been any material changes in the Company’s low-income housing tax credit ("LIHTC") investments and New Markets Tax Credits ("NMTC") investments, which are included in other assets on the Company’s consolidated balance sheet.

See Note (6) of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for disclosures regarding these investments.

Liquidity and Funding

The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered or reciprocal deposits. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. The Company is highly liquid with a total of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets of 19.6%.

40

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, 2023.

Deposits

At June 30, 2024, deposits totaled $11.0 billion, an increase of $315.5 million from December 31, 2023. 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 96.8% at June 30, 2024 and 97.4% at December 31, 2023. Noninterest-bearing deposits to total deposits were 34.6% at June 30, 2024 compared to 37.2% at December 31, 2023. Quantitative tightening by the Federal Reserve and competition for deposits has increased, and available yields have similarly increased, causing noninterest-bearing deposits to move to interest-bearing deposits and off-balance-sheet sweep account products.

Off-balance-sheet sweep accounts totaled $4.5 billion at June 30, 2024 compared to $4.3 billion at December 31, 2023. The movement of customers' funds into the Company's off-balance-sheet sweep accounts affected the balances of both cash and deposits.

Subordinated Debt

See Note (5) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.

Short-Term Borrowings and Lines of Credit

Short-term borrowings, consisting primarily of federal funds purchased and repurchase agreements, are another source of funds for the Company. The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained. Short-term borrowings were $4.3 million at June 30, 2024 compared to $3.4 million at December 31, 2023.

The Company has several lines of credit available. At June 30, 2024, BancFirst had $850.1 million available on its line of credit from the FHLB of Topeka, Kansas and a $25.0 million line of credit with another financial institution that is an overnight federal funds facility. At June 30, 2024, BancFirst had no advances outstanding under either line of credit. Worthington has $10.5 million in lines of credit with other financial institutions that serve as overnight federal funds facilities, a Federal Reserve discount window capacity of $28.8 million and a $77.7 million line of credit from the FHLB of Dallas, Texas to use for liquidity or to match-fund certain long-term rate loans. Worthington has no advances outstanding at June 30, 2024 under any of these lines of credit.

Capital Resources

Stockholders’ equity totaled $1.5 billion at June 30, 2024, an increase of $78.6 million from December 31, 2023. In addition to net income of $101.0 million, other increases in stockholders’ equity during the six months ended June 30, 2024 included $2.6 million related to common stock issuances for stock option exercises, $1.4 million related to stock-based compensation and $1.8 million in accumulated other comprehensive income, that were partially offset by $28.4 million in dividends. The Company’s leverage ratio and other risk-based capital ratios at June 30, 2024 were well in excess of the regulatory requirements.

See Note (7) of the Notes to Consolidated Financial Statements for a discussion of capital ratios and requirements.

Liquidity Risk and Off-Balance-Sheet Arrangements

There have not been any material changes in the Company’s liquidity risk and off-balance-sheet arrangements included in Management’s Discussion and Analysis which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

41

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes in the Company’s disclosures regarding market risk since December 31, 2023, the date of its most recent annual report to stockholders.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s Chief Executive Officer, Chief Financial Officer and its Disclosure Committee, which includes the Company’s Executive Chairman, Chief Risk Officer, Chief Internal Auditor, Chief Asset Quality Officer, Controller, General Counsel and Director of Financial Reporting, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on their evaluation they concluded that the disclosure controls and procedures of the Company are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms.

Changes in Internal Control Over Financial Reporting. During the period to which this report relates, there have not been any changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, such controls.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The Company has been named as a defendant in various legal actions arising from the conduct of its normal business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in the opinion of the Company, any such liability will not have a material adverse effect on the consolidated financial statements of the Company.

Item 1A. Risk Factors.

As of June 30, 2024, 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, 2023.

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.

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Item 6. Exhibits.

Exhibit Number	Exhibit
3.1	Amended and Restated By-Laws of BancFirst Corporation (filed as Exhibit 3.1 to the Company's Quarterly Report on form 10Q for the Quarter Ended March 31, 2023 and incorporated herein by reference).
3.2	Restated Certificate of Incorporation of BancFirst Corporation dated August 5, 2021. (filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2021).
10.1	Amended and Restated BancFirst Corporation Directors' Deferred Stock Compensation Plan. (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated May 23, 2024 and incorporated herein by reference).
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**	CEO’s & CFO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document.
101.SCH	Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.
104	Cover page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101).
*	Filed herewith.
**	This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

44

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 6, 2024	/s/ David Harlow
	David Harlow
	President
	Chief Executive Officer
	(Principal Executive Officer)
Date: August 6, 2024	/s/ Hannah Andrus
	Hannah Andrus
	Executive Vice President
	Chief Financial Officer
	(Principal Financial Officer)

45