SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 24, 1995
--------------
BANCFIRST CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
OKLAHOMA 0-14384 73-1221379
- -------- ------- ----------
(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
101 North Broadway, Suite 200, Oklahoma City, Oklahoma 73102
- ------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405)270-1000
-------------
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The audited financial statements of State National
Bank required by this item are provided as follows: PAGE
------
Independent Auditors' Report 3
Balance Sheet as of December 31, 1994 4
Statement of Income for the Year Ended 5
December 31, 1994
Statement of Stockholders' Equity for the Year Ended 6
December 31, 1994
Statement of Cash Flows for the Year Ended 7
December 31, 1994
Notes to Financial Statement 8
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required by this
item is provided as follows: PAGE
------
Unaudited Pro Forma Consolidated Condensed Balance 19
Sheet as of December 31, 1994
Unaudited Pro Forma Consolidated Condensed 20
Statement of Income for the Year Ended
December 31, 1994
Notes to Unaudited Pro Forma Consolidated 21
Condensed Financial Statements
The unaudited pro forma consolidated condensed
financial statements and related notes present the
pro forma effects of the merger described in
Item 2 of this report. The pro forma consolidated
condensed balance sheet is presented as if the
merger occurred at December 31, 1994. The pro
forma consolidated condensed statement of income
for the year ended December 31, 1994 is presented
as if the merger occurred at January 1, 1994. The
merger was accounted for using the purchase
method.
1
Pro forma data are based on assumptions and
include adjustments as explained in the notes to
the unaudited pro forma consolidated condensed
financial statements. The pro forma data are not
necessarily indicative of the financial results
that would have occurred had the merger been
effective on the date assumed and should not be
viewed as indicative of operations in future
periods. The unaudited pro forma consolidated
condensed financial statements and related notes
should be read in conjunction with the 1994
BancFirst Corporation Form 10-K and the audited
financial statements of State National presented
elsewhere herein.
(c) EXHIBITS.
EXHIBIT
NUMBER EXHIBIT.
- ------- --------------------------------------------------
2.1 Agreement and Plan of Reorganization dated
October 28, 1994 among BancFirst, State National
Bank, Marlow, Oklahoma, and certain shareholders
of State National Bank (filed as Exhibit 2.4 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994 and
incorporated herein by reference).
2
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
State National Bank
We have audited the balance sheet of State National Bank as of December 31,
1994, and the related statements of income, stockholders' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of State National Bank at December
31, 1994, and the results of its operations, stockholders' equity, and cash
flows for the year then ended in conformity with generally accepted accounting
principles.
Finley & Cook
March 21, 1995
3
STATE NATIONAL BANK
BALANCE SHEET
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
DECEMBER 31, 1994
-----------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 3,293,191
Federal funds sold 7,650,000
Securities available for sale 9,743,096
Securities to be held to maturity 37,031,707
Loans (net of allowance for possible
loan losses of $372,600) 42,362,434
Premises and equipment, net 510,836
Interest receivable 934,797
Other real estate owned, net 445,118
Deferred tax asset, net 199,663
Other assets 54,760
------
$ 102,225,602
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing 8,599,638
Interest-bearing 77,076,106
----------
Total deposits 85,675,744
Interest payable 293,840
Income taxes payable 8,737
Other liabilities 19,516
------
Total liabilities 85,997,837
----------
Stockholders' equity:
Common stock 300,000
Additional paid-in capital 300,000
Undivided profits 15,882,807
Unrealized loss on securities available for sale,
net of deferred taxes (255,042)
--------
Total stockholders' equity 16,227,765
----------
$ 102,225,602
-----------
-----------
See accompanying notes to financial statements.
4
STATE NATIONAL BANK
STATEMENT OF INCOME
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------
Interest income:
Loans, including fees $ 3,590,622
Investment securities:
Taxable 2,796,598
Tax-exempt 111,930
Federal funds sold 187,696
Other 43,461
------
Total interest income 6,730,307
---------
Interest expense:
Deposits 2,733,299
Short-term borrowings 2,363
-----
Total interest expense 2,735,662
---------
Net interest income 3,994,645
Provision for possible loan losses 21,170
------
Net interest income after provision for
possible loan losses 3,973,475
---------
Other income:
Service charges on deposit accounts 289,453
Other service charges and fees 70,650
Other 46,542
------
Total other income 406,645
-------
Other expenses:
Salaries and employee benefits 1,185,251
Occupancy 84,320
Depreciation 66,246
Realized losses on securities available for sale 131,520
Data processing expense 109,774
Legal and accounting 132,342
Litigation settlement 83,500
Regulatory insurance and assessments 190,919
Other 339,477
-------
Total other expenses 2,323,349
---------
Income before income taxes 2,056,771
Income tax expense 699,000
-------
Net income $ 1,357,771
---------
---------
Income per average outstanding common share $ 452.59
------
------
See Independent Auditors' Report
See accompanying notes to Financial statements.
5
STATE NATIONAL BANK
STATEMENT OF STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------
Common stock (par value $100 per share;
6,000 shares authorized, 3,000 shares
issued, and outstanding):
Balance at beginning and end of year $ 300,000
-------
Additional paid-in capital:
Balance at beginning and end of year 300,000
-------
Undivided profits:
Balance at beginning of year 14,543,036
Net income 1,357,771
Dividends paid (18,000)
-------
Balance at end of year 15,882,807
----------
Unrealized loss on securities available
for sale, net of deferred taxes (255,042)
--------
Total stockholders' equity $ 16,227,765
----------
----------
See Independent Auditors' Report
See accompanying notes to Financial statements.
6
STATE NATIONAL BANK
STATEMENT OF CASH FLOWS
Increase in Cash and Due From Banks
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,357,771
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 66,246
Deferred income tax 43,000
Premium amortization and discount accretion of
investments, net (41,520)
Provision for possible loan losses 21,170
Realized losses on securities available for sale 131,520
Increase in interest receivable (17,297)
Increase in interest payable 38,899
Increase in other assets and other real estate owned (153,573)
Decrease in income taxes receivable 48,701
Increase in other liabilities (65,891)
-------
Net cash provided by operating activities 1,429,026
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in federal funds sold (5,475,000)
Purchase of securities:
Available for sale (17,523,919)
Held to maturity (14,044,194)
Proceeds from maturities of securities:
Available for sale 7,800,000
Held to maturity 190,000
Proceeds from sales of securities:
Available for sale 22,636,185
Proceeds from principal payments received on securities:
Available for sale 4,269,476
Held to maturity 3,794,216
Net increase in loans (1,555,762)
Purchase of premises and equipment, net (110,564)
--------
Net cash provided by investing activities (19,562)
-------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in noninterest-bearing deposits 713,180
Net decrease in interest-bearing deposits (1,413,413)
Dividends paid (18,000)
-------
Net cash used in financing activities (718,233)
--------
NET INCREASE IN CASH AND DUE FROM BANKS 691,231
Cash and due from banks at beginning of year 2,601,960
---------
Cash and due from banks at end of year $ 3,293,191
---------
---------
See Independent Auditors' Report
See accompanying notes to Financial statements.
7
STATE NATIONAL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of State National Bank, Marlow,
Oklahoma, (the "Bank") conform to generally accepted accounting
principles and general practices within the banking industry. The
following represent the more significant of the accounting and reporting
policies and practices.
INVESTMENT SECURITIES
In May 1993, the Financial Accounting Standards Board issued FASB
Statement No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." (FASB No. 115), which became effective for years
beginning after December 15, 1993. The Bank implemented FASB No. 115 as
of January 1, 1994. FASB No. 115 requires investment securities to be
categorized into the following three groups:
- Investments to be held to maturity;
- Investments available for sale; and
- Trading investments.
The Bank has no investments classified as trading. Investment
securities classified as "available for sale" are carried at their
market value with market value adjustments, net of deferred taxes,
reflected as a component of stockholders' equity. Investments
classified as "held to maturity" are carried at cost adjusted for the
amortization of premiums and accretion of discounts using a method which
approximates the interest method.
Declines in the fair value of individual held-to-maturity and available-
for-sale securities below their cost that are other than temporary will
result in write-downs of the individual securities to their fair value.
The related write-downs will be included in earnings as realized losses.
For the year ended December 31, 1994, there have been no such write-
downs.
Gains and losses on the sales of investment securities are recognized on
a completed transaction basis. The basis of the securities sold is
determined by specific identification of each security.
LOANS
Loans are stated at the principal amount outstanding, net of unearned
discount and allowances for possible loan losses. Interest income on
installment loans is recorded by use of a method which produces a
reasonable approximation of constant yield on outstanding principal.
Interest on other loans is recognized based upon the principal amount
outstanding.
A loan is placed on nonaccrual status when, in the opinion of
management, the future collectability of interest and principal is in
serious doubt. Interest income on these loans is only recognized to the
extent payments are received and only when all doubt regarding future
collectability of principal is removed.
In May 1993, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan" (FASB No. 114). FASB No. 114 became effective for years
beginning after December 15, 1994, and requires banks to specifically
identify
See Independent Auditors' Report 8
STATE NATIONAL BANK
impaired loans, as defined in the statement, and to measure the
impairment based on the fair value of the collateral, if the loan is
collateral dependent, or upon the present value of expected future
discounted cash flows.
The Bank will adopt FASB No. 114 on a prospective basis during 1995.
The impact that FASB No. 114 will have on the Bank's financial
statements is not known or reasonably determinable at this time.
LOAN ORIGINATION FEES AND COSTS
Loan origination fees less certain direct origination costs, if
material, are capitalized and recognized as an adjustment of yield.
Such fees and origination costs were not considered material during
1994.
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses charged to operating expense is
based upon management's evaluation of the inherent risks in the loan
portfolio. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible. The allowance is determined based on the results of
continuing internal loan review procedures, including evaluation of the
collectability of loans and prior loan loss experience. The evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may adversely affect
the borrowers' ability to pay.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated
depreciation. Depreciation is charged to occupancy expense and is
computed primarily by the use of the straight-line method over the
estimated useful lives of the assets, ranging from 5 to 40 years.
Maintenance and repairs are charged to expense as incurred, while
improvements are capitalized. When assets are retired or otherwise
disposed of, the cost and applicable accumulated depreciation are
removed from the respective accounts and the resulting gain or loss is
reflected in income.
OTHER REAL ESTATE OWNED (OREO)
Real estate and other assets acquired in actual or in-substance
foreclosures are carried at the lower of cost or fair market value.
Fair market value is based on independent appraisals and other relevant
factors. Prior to foreclosure, the value of the underlying loan is
written-down to the fair market value of the assets acquired by a charge
to the OREO valuation reserve, if necessary. Any subsequent write-downs
are charged against noninterest expense.
PENSION PLAN
Pension plan cost, determined in accordance with Statement of Financial
Standards No. 87, includes current costs less the amortization of
transition assets and the deferral of unrecognized gains.
RELATED PARTY TRANSACTIONS
Certain officers, directors, and their associated businesses were
customers of and engaged in transactions with the Bank, consisting
primarily of deposits and loans.
INCOME TAXES
Effective January 1, 1993, the Bank adopted Financial Accounting
Standards Board No. 109, "Accounting for Income Taxes" which requires a
liability approach to financial accounting and
See Independent Auditors' Report 9
STATE NATIONAL BANK
reporting for income taxes. The difference between the financial
statement and tax bases of assets and liabilities is determined
annually. Deferred income tax assets and liabilities are computed for
those differences that have future tax consequences using the currently
enacted tax laws and rates that apply to the years in which they are
expected to affect taxable income. Valuation allowances are
established, if necessary, to reduce deferred tax asset amounts to the
amounts that will more likely than not be realized. Income tax expense
is the current tax payable or refundable for the year, plus or minus the
net change in the deferred tax asset and liability accounts.
DIVIDEND RESTRICTIONS
All banks have regulatory restrictions regarding the payment of cash
dividends. The approval of the Comptroller of the Currency is required
for any national bank desiring to pay dividends in excess of earnings
retained in the current year plus retained net profits for the preceding
2 years.
OFF-BALANCE-SHEET INFORMATION
In the ordinary course of business, the Bank has entered into off-
balance-sheet financial instruments consisting of commitments to extend
credit and standby letters of credit. Such financial instruments are
recorded in the financial statements when they become payable.
EARNINGS PER SHARE
Income per share of common stock is based on net income divided by the
weighted average number of shares outstanding during the year. During
1994, the average number of common shares outstanding was 3,000.
STATEMENT OF CASH FLOWS
For purposes of presentation in the Statement of Cash Flows for 1994,
cash and cash equivalents are defined as those amounts in the balance
sheet caption "Cash and due from banks."
During 1994, additional cash flow information is as follows:
Cash paid for:
Interest $ 2,696,763
---------
---------
Income taxes $ 615,834
-------
-------
(2) RESTRICTIONS ON CASH AND DUE FROM BANKS
Aggregate reserves (in the form of vault cash and deposits with the
Federal Reserve Bank) of approximately $455,000 were required to satisfy
federal regulatory and other correspondent banking requirements at
December 31, 1994.
(3) INVESTMENT SECURITIES
The carrying amounts of investment securities as shown on the Bank's
balance sheet at December 31, 1994, were as follows:
See Independent Auditors' Report 10
STATE NATIONAL BANK
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---- ----- ------ -----
Securities available for sale:
Debt securities issued by:
U.S. Treasury $ 4,973,189 - (62,015) 4,911,174
Other U.S. Government
corporations and
agencies 4,283,041 19,112 (70,263) 4,231,890
Debt securities issued by
states of the U.S. and
political subdivision of
the states 100,000 5,232 - 105,232
Other securities 494,800 - - 494,800
------- --- --- -------
$ 9,851,030 24,344 (132,278) 9,743,096
--------- ------ -------- ---------
--------- ------ -------- ---------
Securities held to maturity:
Debt securities issued by:
U.S. Treasury $ 2,470,393 - (41,880) 2,428,513
Other U.S. Government
corporations and
agencies 32,572,990 32,482 (1,221,422) 31,384,050
Debt securities issued by
states of the U.S. and
political subdivisions of
the states 1,988,324 10,701 (42,745) 1,956,280
--------- ------ ------- ---------
$ 37,031,707 43,183 (1,306,047) 35,768,843
---------- ------ ---------- ----------
---------- ------ ---------- ----------
The amortized and estimated market value of debt securities at December 31,
1994, by contractual maturity, are shown below. Expected maturities will
differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
Securities Securities to be
Available for Sale Held to Maturity
------------------ ----------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
---- ----- ---- -----
Due in 1 year or less $ 2,273,106 2,252,695 160,627 160,678
Due after 1 through 5 years 3,775,033 3,745,023 3,764,544 3,707,969
Due after 5 through 10 years 489,706 494,930 796,732 787,222
Due after 10 years 2,818,385 2,755,648 32,309,804 31,112,974
Securities with no
scheduled repayment 494,800 494,800 - -
------- ------- --- ---
$ 9,851,030 9,743,096 37,031,707 35,768,843
--------- --------- ---------- ----------
--------- --------- ---------- ----------
See Independent Auditors' Report 11
STATE NATIONAL BANK
At December 31, 1994, investment securities with a carrying value of
approximately $14,945,000 and a market value of approximately
$18,625,000 were pledged as collateral to secure public funds on deposit
and for other purposes required or permitted by law.
During 1994, the Bank transferred $21,848,536 of investments from
"available for sale" to "held to maturity." At the time of the
transfer, there was a net unrealized loss of $279,231 on the
investments. The amount of unrealized loss was accounted for as an
adjustment to the amortized cost of the investments and is being
amortized over the remaining life of the investments. The amount of the
unrealized loss, net of deferred taxes, on the investments transferred
was left as a component of stockholders' equity and is also being
amortized over the life of the investments.
During 1994, all sales of investments were from the "available for sale"
category. A summary of such sales is as follows:
Gross realized gains:
U.S. Treasury securities $ 502
U.S. Government agencies 33,825
------
34,327
------
Gross realized losses:
U.S. Treasury securities (8,822)
U.S. Government agencies (157,025)
--------
(165,847)
--------
Net realized losses on sales of
securities available for sale $ (131,520)
--------
--------
(4) LOANS
A summary of the Bank's loans at December 31, 1994, is as follows:
Commercial $ 13,560,310
Real estate 18,325,487
Installment loans 4,962,315
Agriculture 1,673,935
Other, including overdrafts 4,247,370
---------
42,769,417
Less unearned discount 34,383
------
Loans, net of unearned discount 42,735,034
Less allowance for possible loan losses 372,600
-------
Net loans $42,362,434
----------
----------
Loans on which the accrual of interest has been discontinued or reduced
amounted to $680,604 at December 31, 1994. Interest income earned on
the nonaccrual loans at December 31, 1994, was approximately $11,000.
Had interest accrued during the entire year, interest income from these
loans would have approximated $46,000 for the year ended.
The Bank granted loans, in the ordinary course of business, to certain
executive officers, directors, and their affiliates. The Bank believes
that all such loans were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and do not involve more
than the normal risk of collectability. The aggregate dollar amount of
these loans was approximately $477,000 at December 31, 1994.
See Independent Auditors' Report 12
STATE NATIONAL BANK
Changes in the allowance for possible loan losses account for the year
ended December 31, 1994, is as follows:
Balance at beginning of year $ 403,762
Provision charged to expense 21,170
Recoveries of loans previously charged-off 17,116
Loans charged-off (69,448)
----------
Balance at end of year $ 372,600
----------
----------
The Bank grants commercial, real estate, agribusiness, and consumer
loans to customers in the state of Oklahoma. Although the Bank has a
diversified loan portfolio, the majority of their customers are
borrowers who are local residents within the Marlow and Duncan area.
The economic conditions of the market area may have an impact on the
debtors' ability to repay their loans.
(5) PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1994, is summarized as follows:
Land $ 63,528
Building and improvements 738,405
Furniture, fixtures, and equipment 665,061
----------
1,466,994
Less accumulated depreciation 956,158
----------
$ 510,836
----------
----------
(6) OTHER REAL ESTATE OWNED (OREO)
Other real estate owned (OREO) consists of the following:
OREO $ 516,664
Allowance for possible write-downs and
disposal costs 71,546
----------
$ 445,118
----------
----------
Changes in the allowance for possible write-downs and disposal costs of
the OREO account for the year ended December 31, 1994, is as follows:
Balance at beginning of year $ 35,930
Provisions charged to expense 39,616
Write-down in carrying value of properties (4,000)
----------
Balance at end of year $ 71,546
----------
----------
See Independent Auditors' Report 13
STATE NATIONAL BANK
(7) DEPOSITS
Certificates of deposit in denominations of $100,000 or more amounted to
approximately $18,262,000 at December 31, 1994. NOW accounts amounted
to approximately $11,554,000 at December 31, 1994.
Deposits of executive officers, directors, principle shareholders, and
their related affiliates totaled approximately $8,449,000, of which
$7,750,000 were interest-bearing, at December 31, 1994.
(8) INCOME TAXES
The components of income tax expense at December 31, 1994, is as
follows:
Current tax expense - federal $ 656,000
Deferred tax expense 43,000
------
Income tax expense $ 699,000
-------
-------
The primary difference between the expected tax expense at the federal
statutory income tax rate of 34% and the expense reflected in the
financial statements, is due to tax exempt interest income on securities
and loans.
The Bank has approximately $388,000 of net operating loss carryforwards
available for Oklahoma income taxes. The net operating loss
carryforwards will expire by 2005, if not used sooner.
Deferred tax assets recorded as of December 31, 1994, is as follows:
Assets:
Benefit of net operating loss carryforward
for state income tax purposes $ 19,462
Difference in financial and tax reporting
methods for:
Allowance for loan losses 28,052
OREO 20,765
Deferred tax asset established as a
result of FASB No. 115 for market value
adjustments on securities 131,384
-------
Net deferred tax assets $ 199,663
-------
-------
(9) EMPLOYEE BENEFIT PLANS
PROFIT SHARING
The Bank has a profit sharing plan (the "Profit Sharing Plan") which
covers all employees who meet certain eligibility requirements. An
eligible employee must be at least 21 years of age and must have
completed at least 1 year of service. Under the terms of the Profit
Sharing Plan, participants cannot contribute to the Profit Sharing Plan.
The Bank may make optional contributions annually out of net profits.
Participants become fully vested after 6 years of service.
The Bank made no optional contributions during the year ended
December 31, 1994.
See Independent Auditors' Report 14
STATE NATIONAL BANK
PENSION PLAN
The Bank has a defined benefit pension plan (the "Pension Plan")
covering all employees who meet certain eligibility requirements. To be
eligible for the Pension Plan, an employee must have been employed 12
months and have at least 1,000 hours of service. The pension benefits
are payable at age 65 as a life annuity (with 120 guaranteed payments)
equal to the sum of 1.05% of the average monthly compensation, plus
.585% of the average monthly compensation in excess of the covered
compensation times the years of service with the Bank. The Pension Plan
assets consist primarily of cash and securities. The Bank's funding
policy is to fund an amount, as determined by the Bank and its
independent actuary, that will meet the minimum funding required by
applicable law and maximize the tax benefit to the Bank. During 1994,
the Bank contributed $60,220 to the Pension Plan. The assumptions used
in determining the pension expense and funded status information below
were a discount rate of 7.25%, a long-term rate of return on assets of
7.25%, and salary progression of 3%.
The net periodic cost for December 31, 1994, includes the following
components:
Service cost $ 41,049
Interest cost on projected benefit obligation 62,036
Return on Pension Plan assets 10,163
Net amortization and deferred items (47,905)
-------
Net periodic pension cost as determined by
FASB No. 87 65,343
Amount not recorded due to immateriality 5,123
-----
Pension expense recorded by Bank $ 60,220
------
------
The Pension Plan was amended as of December 31, 1994. The amendment
ceased the accrual of benefits by participants in the Pension Plan. In
addition, all participants were deemed 100% vested in the accrued
benefits earned by the participants as of December 31, 1994. No further
benefits will accrue on behalf of any of the participants after December
31, 1994.
Also, in January 1995, the Board of Directors passed a resolution to
terminated the Pension Plan effective April 1, 1995. While the
amendment of the Pension Plan curtailed benefits which would normally
result in a gain for the Bank, the amendment and termination were done
in response to the Bank being sold, as more fully described in Note 12.
No gain on the curtailment will be recognized in 1994. The curtailment
gain along with any provision for settlement and termination benefits
will be recognized in 1995 when the actual termination of the Pension
Plan takes place and when the costs can be reasonably estimated.
Subsequent to December 31, 1994, the Bank and their consulting actuary
estimated $231,000 to be needed to fully fund the Pension Plan and pay
certain termination costs. An estimate of expense and costs in
accordance with FASB No. 87 and 88 has not been made.
As a result of the amendment and curtailment of benefits, a gain of
$159,511 will be recognized in 1995. The gain results from the
following:
Reduction in projected benefit obligation $ 234,339
Recognition of previous unrealized loss (74,828)
-------
Net curtailment gain to be recognized $ 159,511
-------
-------
However, the Bank will also have to recognize settlement and termination
costs in 1995 when the Pension Plan is terminated.
See Independent Auditors' Report 15
STATE NATIONAL BANK
The following table summarizes the funded status of the Pension Plan and
the related amounts recognized in the Bank's financial statements as of
December 31, 1994:
Actuarial present value of benefit obligation:
Vested benefit obligation $ 722,905
Nonvested benefit obligation -
----
Accumulated benefit obligation $ 722,905
-------
Plan assets at fair value 701,567
Projected benefit obligation 957,244
-------
Projected benefit obligation in excess of plan assets (255,677)
Unrecognized transition liability, being amortized
over 16 years 175,726
Adjustment required to recognize minimum liability (16,215)
Unrecognized net loss 74,828
------
Pension (liability) to be recognized at
December 31, 1994 $ (21,338)
------
------
The above liability was not recorded by the Bank.
(10) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuations in interest
rates. These financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the
amount recognized in the statement of financial position. The contract
or notional amounts of those instruments reflect the extent of
involvement the Bank has in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit
and standby letters of credit is represented by the contractual notional
amount of those instruments. The Bank uses the same credit policies in
making commitments and conditional obligations as it does for on-
balance-sheet instruments.
1994
Contract or
Notional Amount
---------------
Financial instruments whose contract
amounts represent credit risk:
Commitments to extend credit:
Loans $ 779,000
Letters of credit 142,000
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension
See Independent Auditors' Report 16
STATE NATIONAL BANK
of credit, is based on management's credit evaluation of the counter
party. Collateral held varies, but may include accounts receivable,
inventory, property, plant and equipment, livestock, and real estate.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Bank holds collateral supporting those commitments for
which collateral is deemed necessary.
(11) CONCENTRATION OF CREDIT RISK
At December 31, 1994, the Bank had a significant concentration of credit
risk with the following financial institutions. The credit risk was in
the form of cash clearings, federal funds sold, and correspondent bank
accounts held. The Bank evaluates the stability of the financial
institutions they do business with in determining overall credit risk.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instruments noted above is represented by
the contractual notional amount of those instruments.
Contract or
Notional Amount
-----------------
Federal Home Loan Bank,
Topeka, Kansas $ 5,000,482
Boatmen's First National Bank,
Oklahoma City, Oklahoma 2,620,294
First Tennessee Bank,
Knoxville, Tennessee 1,008,013
The Boatmen's National Bank,
St. Louis, Missouri 1,001,514
---------
$ 9,630,303
---------
---------
(12) AGREEMENT AND PLAN OF REORGANIZATION
On October 28, 1994, the Bank entered into an agreement to sell 100% of
its issued and outstanding shares of common stock to BancFirst of
Oklahoma City. The purchase is subject to approval by the Oklahoma
State Banking Board and the Federal Reserve Bank. Such approvals have
been received and closing occurred during March 1995. State National
Bank was merged with BancFirst, with BancFirst being the surviving
entity. The acquisition will be accounted for by BancFirst as a
purchase.
(13) DIVIDENDS PER SHARE
The Bank declared and paid dividends of $18,000 or $6 per share of
outstanding common stock as of December 31, 1994.
See Independent Auditors' Report 17
STATE NATIONAL BANK
(14) COMMITMENTS AND CONTINGENT LIABILITIES
The Bank is a defendant in legal actions arising from normal business
activities. Management believes that those actions are without merit or
that the ultimate liability, if any, from them will not materially
affect the Bank's financial position.
See Independent Auditors' Report 18
BANCFIRST CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
December 31, 1994
(Dollars in thousands)
State
BancFirst National Pro Forma BancFirst
Historical Historical Adjustments Pro Forma
----------- ------------ ------------- -----------
ASSETS
Cash and due from banks $ 53,564 $ 3,293 $ 1,369 (c) $ 58,226
Securities 223,044 46,775 (1,263) (d) 268,556
Federal funds sold 28,260 7,650 (17,081) (a) 17,460
(1,369) (c)
Loans:
Total loans (net of unearned interest) 522,314 42,735 565,049
Allowance for possible loan losses (9,729) (373) (10,102)
----------- ---------- -----------
Loans, net 512,585 42,362 554,947
Premises and equipment, net 26,462 511 26,973
Other real estate owned 2,183 445 2,628
Intangible assets, net 7,960 -- 2,478 (g) 10,438
Accrued interest receivable 8,518 935 9,453
Other assets 10,339 255 (131) (e) 10,463
----------- ---------- ---------- -----------
Total assets $ 872,915 $ 102,226 $ (15,997) $ 959,144
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 168,426 $ 8,600 $ $ 177,026
Interest-bearing 616,425 77,076 693,501
----------- ---------- -----------
Total deposits 784,851 85,676 870,527
Short-term borrowings 117 -- 117
Accrued interest payable 2,089 294 2,383
Other liabilities 3,897 28 231 (f) 4,156
----------- ---------- ---------- -----------
Total liabilities 790,954 85,998 231 877,183
----------- ---------- ---------- -----------
Stockholders' equity:
Common stock 6,203 300 (300) (b) 6,203
Capital surplus 34,259 300 (300) (b) 34,259
Retained earnings 45,611 15,883 (15,883) (b) 45,611
Unrealized securities losses, net of tax (4,112) (255) 255 (b) (4,112)
----------- ---------- ---------- -----------
Total stockholders' equity 81,961 16,228 (16,228) 81,961
----------- ---------- ---------- -----------
Total liabilities and stockholders' equity $ 872,915 $ 102,226 $ (15,997) $ 959,144
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
19
BANCFIRST CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 1994
(Dollars in thousands, except per share data)
State
BancFirst National Pro Forma BancFirst
Historical Historical Adjustments Pro Forma
----------- ------------ ------------- -----------
INTEREST INCOME
Loans, including fees $ 45,609 $ 3,591 $ $ 49,200
Investment securities
Taxable 12,184 2,796 14,980
Tax-exempt 631 112 743
Federal funds sold and other 1,350 231 (715) (h) 810
(56) (i)
----------- ---------- ----------- -----------
Total interest income 59,774 6,730 (771) 65,733
----------- ---------- ----------- -----------
INTEREST EXPENSE
Deposits 20,780 2,733 23,513
Short-term borrowings 19 2 21
Line of credit 39 -- 39
----------- ---------- ----------- -----------
Total interest expense 20,838 2,735 23,573
----------- ---------- ----------- -----------
Net interest income 38,936 3,995 (771) 42,160
Provision for possible loan losses 380 21 401
----------- ---------- ----------- -----------
Net interest income after provision for possible loan losses 38,556 3,974 (771) 41,759
----------- ---------- ----------- -----------
NONINTEREST INCOME
Service charges on deposits 7,641 290 7,931
Securities transactions 5 (132) (127)
Other 3,572 117 3,689
----------- ---------- ----------- -----------
Total noninterest income 11,218 275 11,493
----------- ---------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits 17,288 1,185 (60) (j) 18,353
Occupancy and fixed assets expense, net 1,787 84 1,871
Depreciation 1,749 66 1,815
Amortization 1,262 -- 211 (k) 1,473
Data processing services 1,359 110 1,469
Net (income) expense from other real estate owned (312) -- (312)
Other 8,558 747 9,305
----------- ---------- ----------- -----------
Total noninterest expense 31,631 2,192 151 33,974
----------- ---------- ----------- -----------
Income before taxes 18,143 2,057 (922) 19,278
Income tax expense (6,546) (699) 306 (l) (6,982)
(43) (m)
----------- ---------- ----------- -----------
Net income $ 11,597 $ 1,358 $ (659) $ 12,296
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
PER SHARE DATA (PRIMARY AND FULLY DILUTED)
Net income $ 1.80 $ 452.59 $ 1.91
Average common shares and common stock equivalents outstanding 6,399,518 3,000 6,399,518
----------- ---------- -----------
----------- ---------- -----------
See accompanying notes to unaudited pro forma consolidated condensed financial
statements.
20
BANCFIRST CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The unaudited pro forma consolidated condensed financial statements for the year
ended December 31, 1994 are based upon BancFirst Corporation's and State
National Bank's audited financial statements. The pro forma consolidated
condensed balance sheet is presented as if the merger occurred at December 31,
1994. The pro forma consolidated condensed statement of income is presented as
if the merger occurred at January 1, 1994. Other assumptions and the pro forma
adjustments are described below.
(2) PRO FORMA ADJUSTMENTS
Pro forma consolidated condensed balance sheet reflects the following
adjustments:
(a) Reflect the reduction of federal funds sold due to the
cash payment for the common stock of State National in
accordance with the terms of the merger.
(b) Eliminate the stockholders' equity of State National.
(c) Reflect the increase in reserve requirements due to loss
of State National's low reserve tranche.
(d) Write down State National's securities held for
investment to market value.
(e) Eliminate deferred tax asset for unrealized net loss on
State National's securities available for sale.
(f) Accrue unfunded liability for termination of State
National's pension plan.
(g) Record core deposit intangible and excess of cost over
fair value of net assets acquired.
The pro forma consolidated condensed statement of income reflects the following
adjustments:
(h) Reduce interest income on funds used for the cash payment
for the common stock of State National.
(i) Reduce interest income for the increase in reserve
requirements.
(j) Eliminate State National's pension plan expense accrual.
(k) Record amortization of core deposit intangible and excess
of cost over fair value of net assets acquired.
(l) Reduce income tax expense for effect of pro forma
adjustments.
(m) Adjust State National's income tax expense to statutory
rate.
21
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 hereunto duly authorized.
June 7, 1995 /Randy P. Foraker/
--------------------------------------
Randy P. Foraker
Sr. Vice President, Controller
and Secretary/Treasurer
(Principal Accounting Officer)
22