FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1996 Commission File Number 0-14384
BANCFIRST-Registered Trademark- CORPORATION
(Exact name of registrant as specified in charter)
OKLAHOMA 73-1221379
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 N. Broadway, Suite 200
Oklahoma City, Oklahoma 73102-8401
(Address of principal executive offices)
(405) 270-1086
(Registrant's area code and telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
As of April 30, 1996, there were 6,239,205 shares of Common Stock outstanding.
FORM 10-Q
CROSS-REFERENCE INDEX
ITEM PART I. FINANCIAL INFORMATION PAGE
- ---- ---------------------------------------------------- ----
1. Financial Statements 1
2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
----------------------------------------------------
1. Legal Proceedings Not Applicable
2. Changes in Securities Not Applicable
3. Defaults Upon Senior Securities Not Applicable
4. Submission of Matters to a Vote of Security Holders Not Applicable
5. Other Information Not Applicable
6. Exhibits and Reports on Form 8-K 9
Signatures 10
PART I. FINANCIAL INFORMATION
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
MARCH 31, DECEMBER 31,
----------------------- ------------
1996 1995 1995
---------- -------- ----------
ASSETS
Cash and due from banks $ 69,435 $ 63,342 $ 85,352
Interest-bearing deposits with banks 6 -- 1
Securities:
Held for investment, at cost (market value:
$61,447, $35,949 and $42,577, respectively) 61,022 35,963 42,005
Available for sale, at market value 226,732 218,451 221,108
Federal funds sold 42,555 25,373 30,085
Loans:
Total loans (net of unearned interest) 715,290 575,657 625,162
Allowance for possible loan losses (11,577) (10,072) (10,646)
---------- -------- ----------
Loans, net 703,713 565,585 614,516
Premises and equipment, net 32,889 26,978 28,308
Other real estate owned 1,476 2,746 781
Intangible assets, net 15,474 9,512 8,106
Accrued interest receivable 11,266 9,575 10,403
Other assets 17,759 9,842 7,673
---------- -------- ----------
Total assets $1,182,327 $967,367 $1,048,338
---------- -------- ----------
---------- -------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $230,648 $171,055 $196,597
Interest-bearing 830,000 701,576 726,572
---------- -------- ----------
Total deposits 1,060,659 872,631 923,169
Short-term borrowings 10,290 214 18,705
Long-term borrowings 1,341 -- 918
Accrued interest payable 3,803 3,149 3,237
Other liabilities 5,773 4,941 3,966
---------- -------- ----------
Total liabilities 1,081,855 880,935 949,995
---------- -------- ----------
Commitments and contingent liabilities
Stockholders' equity:
Common stock (shares issued: 6,239,205,
6,204,564 and 6,225,455 shares,
respectively) 6,239 6,205 6,225
Capital surplus 34,849 34,268 34,769
Retained earnings 58,794 47,931 55,792
Unrealized securities gains (losses),
net of tax 590 (1,972) 1,557
---------- -------- ----------
Total stockholders' equity 100,472 86,432 98,343
---------- -------- ----------
Total liabilities and stockholders' equity $1,182,327 $967,367 $1,048,338
---------- -------- ----------
---------- -------- ----------
See accompanying notes to consolidated financial statements.
1
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
---------- ----------
INTEREST INCOME
Loans, including fees $ 15,597 $ 13,030
Interest-bearing deposits with banks 1 --
Securities:
Taxable 3,784 2,974
Tax-exempt 151 136
Federal funds sold 442 465
---------- ----------
Total interest income 19,975 16,605
---------- ----------
INTEREST EXPENSE
Deposits 7,714 6,635
Short-term borrowings 220 16
Line of credit -- 9
Long-term borrowings 20 --
---------- ----------
Total interest expense 7,954 6,660
---------- ----------
Net interest income 12,021 9,945
Provision for possible loan losses 98 61
---------- ----------
Net interest income after provision for possible loan losses 11,923 9,884
---------- ----------
NONINTEREST INCOME
Service charges on deposits 1,946 1,905
Securities transactions 5 7
Other 1,410 917
---------- ----------
Total noninterest income 3,361 2,829
---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 5,726 4,740
Occupancy and fixed assets expense, net 527 440
Depreciation 499 457
Amortization 387 309
Data processing services 342 300
Net expense from other real estate owned 42 4
Other 2,190 2,040
---------- ----------
Total noninterest expense 9,713 8,290
---------- ----------
Income before taxes 5,571 4,423
Income tax expense (2,070) (1,669)
---------- ----------
Net income $ 3,501 $ 2,754
---------- ----------
---------- ----------
PER SHARE DATA (PRIMARY AND FULLY DILUTED)
Net income $ 0.54 $ 0.43
---------- ----------
---------- ----------
Average common stock and common stock equivalents 6,435,253 6,400,896
---------- ----------
---------- ----------
See accompanying notes to consolidated financial statements.
2
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
THREE MONTHS
ENDED
MARCH 31,
--------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES $ (3,271) $ 4,173
-------- --------
INVESTING ACTIVITIES
Cash and due from banks used for acquisitions (11,281) (15,542)
Purchases of securities (8,244) (10,375)
Maturities of securities 14,209 25,535
Proceeds from sales of securities 5,015 654
Net (increase) decrease in federal funds sold (1,000) 13,310
Purchases of loans (3,940) (2,960)
Proceeds from sales of loans 19,917 8,464
Net other increase in loans (32,681) (16,075)
Purchases of premises and equipment (1,390) (476)
Proceeds from the sale of other real estate owned
and repossessed assets 261 270
Other, net 407 2
-------- --------
Net cash provided (used) by investing activities (18,727) 2,807
-------- --------
FINANCING ACTIVITIES
Net increase (decrease) in demand, transaction and
savings deposits 7,235 (11,116)
Net increase in certificates of deposits 7,538 14,240
Net increase (decrease) in short-term borrowings (8,705) 97
Net increase in long-term borrowings 423 --
Issuance of common stock 93 11
Cash dividends paid (498) (434)
-------- --------
Net cash provided by financing activities 6,086 2,798
-------- --------
Net increase (decrease) in cash and due from banks (15,912) 9,778
Cash and due from banks at the beginning of
the period 85,353 53,564
-------- --------
Cash and due from banks at the end of the period $ 69,441 $ 63,342
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest $ 7,388 $ 5,600
-------- --------
-------- --------
Cash paid during the period for income taxes $ 70 $ --
-------- --------
-------- --------
See accompanying notes to consolidated financial statements.
3
BANCFIRST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(1) GENERAL
The accompanying consolidated financial statements include the accounts
of BancFirst Corporation, BancFirst Investment Corporation, BancFirst,
Lenders Collection Corporation and National Express Corporation. All
significant intercompany accounts and transactions have been eliminated.
Assets held in a fiduciary or agency capacity are not assets of the Company
and, accordingly, are not included in the consolidated financial statements.
The interim financial statements contained herein reflect all
adjustments which are, in the opinion of management, necessary to provide a
fair statement of the financial position and results of operations of the
Company for the interim periods presented. All such adjustments are of a
normal and recurring nature. There have been no significant changes in the
accounting policies of the Company since December 31, 1995, the date of the
most recent annual report. Certain amounts in the 1995 financial statements
have been reclassified to conform with the 1996 presentation.
The preparation of financial statements in conformity with generally
accepted accounting principles inherently involves the use of estimates and
assumptions which affect the amounts reported in the financial statements and
the related disclosures. Such estimates and assumptions may change over time
and actual amounts may differ from those reported.
(2) ACQUISITIONS
In March 1996, the Company acquired City Bankshares, Inc. of Oklahoma
City, Oklahoma ("City Bankshares"), which had $130,000 in total assets.
The acquisition was for cash of $19,125, with City Bankshares and its
subsidiary, City Bank, being merged into BancFirst. C-Teq, Inc., an 85% owned
data processing subsidiary of City Bankshares, was spun off to the
shareholders of City Bankshares prior to the acquisition. BancFirst also
entered into an agreement with the CEO of City Bankshares whereby BancFirst
paid the CEO $1,250 in exchange for an agreement not to compete with
BancFirst for a period of four years. The acquisition was accounted for as a
purchase. Accordingly, the effect of the acquisition is included in the
Company's consolidated financial statements from the date of the acquisition
forward. Pro forma condensed results of operations, as though City
Bankshares had been acquired January 1, 1995, are as follows:
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1996 1995
------------ -----------
Net interest income $13,436 $49,226
Net income $ 3,411 $13,122
Net income per common share
and common stock equivalent $ 0.53 $ 2.05
In March 1995, the Company acquired State National Bank of Marlow,
Oklahoma, which had total assets of $101,976. The acquisition was for cash of
$17,485, with an additional $500 placed in escrow pending the resolution of
certain matters. State National Bank was immediately merged into BancFirst.
The acquisition was accounted for as a purchase. Accordingly, the effect of
the transaction is included in the Company's consolidated financial
statements from the date of the acquisition forward. A core deposit
intangible of $406 and goodwill of $810 were recorded for the acquisition.
Subsequent payments from the escrow, if any, to the former shareholders of
State
4
National Bank will increase the goodwill recorded. Pro forma condensed
results of operations, as though State National Bank had been acquired
January 1, 1994, are as follows:
THREE YEAR ENDED
MONTHS ENDED DECEMBER 31,
MARCH 31, 1995 1994
-------------- ------------
Net interest income $10,607 $42,160
Net income $ 2,934 $12,296
Net income per common share
and common stock equivalent $ 0.46 $ 1.91
5
BANCFIRST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The Company reported net income of $3.5 million for the quarter ended
March 31, 1996, compared to net income of $2.75 million for the first quarter
of 1995. The growth in earnings was the result of a combination of
acquisitions in 1995 and internal growth. Earnings per share was $0.54 for
the first quarter of 1996, compared to $0.43 per share for the first quarter
of 1995.
Total assets increased $134 million from December 31, 1995 and $215
million from March 31, 1995 due to acquisitions having total assets
aggregating approximately $140 million, and internal growth. Stockholders'
equity rose to over $100 million, an increase of $2.13 million compared to
December 31, 1995 and $14 million compared to March 31, 1995.
In March 1996, the Company acquired City Bankshares, Inc. of Oklahoma
City, Oklahoma ("City Bankshares"), which had $130,000 in total assets. The
acquisition was for cash of $19,125, with City Bankshares and its subsidiary,
City Bank, being merged into BancFirst. C-Teq, Inc., an 85% owned data
processing subsidiary of City Bankshares, was spun off to the shareholders of
City Bankshares prior to the acquisition. BancFirst also entered into an
agreement with the CEO of City Bankshares whereby BancFirst paid the CEO
$1,250 in exchange for an agreement not to compete with BancFirst for a
period of four years. The acquisition was accounted for as a purchase.
Accordingly, the effect of the acquisition is included in the Company's
consolidated financial statements from the date of the acquisition forward.
RESULTS OF OPERATIONS
Net interest income increased for the first quarter of 1996 by $2.08
million, or 20.9%, as compared to the same quarter of 1995, primarily as a
result of earning asset growth. Net interest spread was 4.41% for both
quarters while average net earning assets increased $28.5 million. Net
interest margin on a taxable equivalent basis was 5.23% for the first
quarter, compared to 5.25% for the same quarter of 1995.
The Company provided only $98,000 for possible loan losses for the
quarter, compared to $61,000 for the same quarter of 1995. Net loan
charge-offs were $14,000 for the first quarter of 1996 and $82,000 for the
first quarter of 1995, representing annualized rates of only 0.01% and 0.06%
of total loans, respectively.
Noninterest income increased $532,000, or 18.8%, compared to the first
quarter of 1995 due to income added by acquisitions and from increased
mortgage loan activity. Noninterest expense increased $1.42 million, or
17.2%, due to added operating expenses of the banks acquired in 1995 and 1996.
FINANCIAL POSITION
Total securities increased $24.6 million compared to December 31, 1995
and $33.3 million compared to March 31, 1995, as a net result of securities
added by acquisitions and maturities of securities used to fund loan growth.
The net unrealized gain on securities available for sale was $911,000 at the
end of the first quarter of 1996, compared to a gain of $2.4 million at
December 31 and a loss of $3.03 million at March 31, 1995. The average
taxable equivalent yield on the securities portfolio for the first quarter
increased to 6.10% from 5.89% for the same quarter of 1995.
Total loans increased $90.1 million from December 31, 1995 and $140
million from March 31, 1995 due to both internal loan growth and
acquisitions. The allowance for possible loan losses increased $931,000 in
the first
6
three months of 1996 due primarily to purchased reserves from acquisitions.
The allowance as a percentage of total loans was 1.62%, 1.70% and 1.75% at
March 31, 1996, December 31, 1995 and March 31, 1995, respectively.
Nonperforming and restructured assets increased slightly in the first
three months of 1996 to $5.79 million from $5.77 million at year-end 1995 due
to the nonperforming assets of the bank acquired in 1996. Although the ratio
of nonperforming and restructured assets to total assets decreased to only
0.49%, it is reasonable to expect that over the next several years
nonperforming loans and loan losses will rise to historical norms as a result
of economic and credit cycles.
Total deposits increased $138 million as compared to December 31, 1995
and $188 million compared to March 31, 1995 due to acquisitions and internal
growth. The Company's deposit base continues to be comprised substantially of
core deposits, with large denomination certificates of deposit being only
10.8% of total deposits at March 31, 1996.
Short-term borrowings decreased $8.42 million due to the maturity of a
$5 million Federal Home Loan Bank borrowing and decreases in federal funds
purchased and repurchase agreements.
Stockholders' equity rose to over $100 million, an increase of $2.13
million compared to year-end 1995 and $14 million compared to March 31, 1995.
These increases were the result of accumulated earnings and a change from a
net unrealized loss to a net unrealized gain on securities available for
sale. Average stockholders' equity to average assets dropped slightly to
9.38% from 9.43% at December 31, 1995 due to the acquisition in March 1996.
The Company's regulatory capital ratios all remain well in excess of the
minimum requirements.
7
BANCFIRST CORPORATION
SELECTED FINANCIAL STATISTICS
(Dollars in thousands, except per share data)
THREE MONTHS
ENDED
MARCH 31,
----------------------
1996 1995
------- ------
PER COMMON SHARE DATA:
Net income $ 0.54 $ 0.43
Cash dividends declared 0.08 0.07
Book value at period end 16.10 13.93
Tangible book value at period end 13.62 12.40
PERFORMANCE RATIOS:
Return on average assets 1.33% 1.24%
Return on average common equity 14.19 13.09
Increase/(decrease) in tangible book
value (annualized) (24.30) 15.80
Noninterest expense/(net interest
income + noninterest income) 63.14 64.89
MARCH 31,
----------------- DECEMBER 31,
1996 1995 1995
------ ----- -----------
BALANCE SHEET RATIOS:
Average loans to deposits (year to date) 68.41% 66.23% 67.02%
Allowance for possible loan losses to
total loans 1.62 1.75 1.70
Allowance for possible loan losses to
nonperforming and restructured loans 272.40 210.62 216.73
Nonperforming and restructured assets
to total assets 0.49 0.79 0.55
CAPITAL RATIOS:
Average stockholders' equity to average
assets (year to date) 9.38% 9.46% 9.43%
Leverage ratio (regulatory minimum 3%) 7.24 8.53 8.55
Total risk-based capital ratio
(regulatory minimum 8%) 13.41 15.94 16.02
THREE MONTHS ENDED
MARCH 31,
--------------------------------------------
1996 1995
-------------------- --------------------
AVERAGE BALANCES AND NET AVERAGE AVERAGE
INTEREST MARGIN ANALYSIS AVERAGE YIELD/ AVERAGE YIELD/
(TAXABLE EQUIVALENT BASIS): BALANCE RATE BALANCE RATE
---------- ------- -------- -------
Loans $ 638,406 9.87 % $528,696 10.05%
Securities 264,896 6.10 219,305 5.89
Federal funds sold 33,305 5.34 31,344 6.02
---------- --------
Total earning assets 936,607 8.64 779,345 8.72
Nonearning assets 120,804 109,973
---------- --------
Total assets $1,057,411 $889,318
---------- --------
---------- --------
Interest-bearing deposits $ 739,575 4.20% $626,143 4.30%
Short-term borrowings 15,194 5.94 1,101 5.89
Long-term borrowings 1,249 6.39 -- --
---------- --------
Total interest-bearing
liabilities 756,018 4.23 627,244 4.31
Demand deposits 193,678 172,112
Other noninterest-bearing
liabilities 8,495 5,820
Stockholders' equity 99,220 84,142
---------- --------
Total liabilities and
stockholders' equity $1,057,411 $889,318
---------- --------
---------- --------
Net interest spread 4.41% 4.41%
---- -----
---- -----
Net interest margin 5.23% 5.25%
---- -----
---- -----
8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
EXHIBIT
NUMBER EXHBIT
------- -----------------------------------------------------------------
2.1 Agreement and Plan of Reorganization dated October 28,
1994 among BancFirst, State National Bank, Marlow, and
certain shareholders of State National Bank (filed as
Exhibit 2.4 to the Company's Report on Form 10-Q for the
quarter ended September 30, 1994 and incorporated herein
by reference).
2.2 Agreement and Plan of Reorganization dated September 16,
1995 between BancFirst, and City Bankshares, Inc. (filed
as Exhibit 2.2 to the Company's Report on Form 10-Q for
the quarter ended September 30, 1995 and incorporated
herein by reference).
2.3 Agreement dated September 16, 1995 between BancFirst and
William O. Johnstone (filed as Exhibit 2.3 to the
Company's Report on Form 10-Q for the quarter ended
September 30, 1995 and incorporated herein by reference).
27.1* Financial Data Schedule.
_________
* Filed herewith
(b) No reports on Form 8-K have been filed by the Company during
the quarter ended March 31, 1996.
9
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.
May 13, 1996 BANCFIRST CORPORATION
(Registrant)
/s/ Randy Foraker
---------------------------------
Randy P. Foraker
Sr. Vice President, Controller
and Secretary/Treasurer
(Principal Accounting Officer)
10