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 September 30, 1996 Commission File Number 0-14384
BANCFIRST CORPORATION
(Exact name of registrant as specified in charter)
OKLAHOMA 73-1221379
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 N. Broadway, 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 October 31, 1996, there were 6,399,338 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 10
Signatures 11
PART I. FINANCIAL INFORMATION
------------------------------
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
SEPTEMBER 30,
--------------------- DECEMBER 31,
1996 1995 1995
---------- -------- ------------
ASSETS
Cash and due from banks $ 89,288 $ 57,919 $ 85,352
Interest-bearing deposits with banks 1 65 1
Securities 281,971 255,349 263,113
Federal funds sold 10,500 17,368 30,085
Loans:
Total loans (net of unearned interest) 737,356 604,642 625,162
Allowance for possible loan losses (12,006) (10,338) (10,646)
---------- -------- ----------
Loans, net 725,350 594,304 614,516
Premises and equipment, net 33,503 27,729 28,308
Other real estate owned 1,259 2,149 781
Intangible assets, net 14,637 8,195 8,106
Accrued interest receivable 9,975 10,293 10,403
Other assets 20,094 7,858 7,673
---------- -------- ----------
Total assets $1,186,578 $981,229 $1,048,338
========== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 244,282 $173,346 $ 196,597
Interest-bearing 815,350 693,684 726,572
---------- -------- ----------
Total deposits 1,059,632 867,030 923,169
Short-term borrowings 10,665 11,532 18,705
Long-term borrowings 1,448 810 918
Accrued interest payable 4,158 3,434 3,237
Other liabilities 4,184 3,629 3,966
---------- -------- ----------
Total liabilities 1,080,087 886,435 949,995
---------- -------- ----------
Commitments and contingent liabilities
Stockholders' equity:
Common stock 6,243 6,211 6,225
Capital surplus 34,870 34,408 34,769
Retained earnings 65,513 53,293 55,792
Unrealized securities gains (losses),
net of tax (135) 882 1,557
---------- -------- ----------
Total stockholders' equity 106,491 94,794 98,343
---------- -------- ----------
Total liabilities and stockholders'
equity $1,186,578 $981,229 $1,048,338
========== ======== ==========
See accompanying notes to consolidated financial statements.
1
BANCFIRST CORPORATION
CONSOLIDATED INCOME STATEMENT
(Dollars in thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
INTEREST INCOME
Loans, including fees $ 18,031 $ 15,060 $ 50,995 $ 42,711
Interest-bearing deposits with banks -- 1 -- 9
Securities:
Taxable 4,214 3,585 12,151 10,184
Tax-exempt 146 151 445 446
Federal funds sold 318 363 1,214 1,226
---------- ---------- ---------- ----------
Total interest income 22,709 19,160 64,805 54,576
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits 8,665 7,809 24,849 22,329
Short-term borrowings 20 20 343 58
Long-term borrowings 24 -- 67 --
---------- ---------- ---------- ----------
Total interest expense 8,709 7,829 25,259 22,387
---------- ---------- ---------- ----------
Net interest income 14,000 11,331 39,546 32,189
Provision for possible loan losses 432 150 849 408
---------- ---------- ---------- ----------
Net interest income after provision
for possible loan losses 13,568 11,181 38,697 31,781
---------- ---------- ---------- ----------
NONINTEREST INCOME
Service charges on deposits 2,298 1,987 6,481 5,909
Securities transactions -- 48 180 111
Other 1,468 1,145 4,484 3,153
---------- ---------- ---------- ----------
Total noninterest income 3,766 3,180 11,145 9,173
---------- ---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 6,364 5,141 18,396 14,970
Occupancy and fixed assets expense, net 707 550 1,919 1,475
Depreciation 632 431 1,718 1,374
Amortization 531 397 1,450 1,071
Data processing services 352 284 1,005 878
Net (income) expense from other
real estate owned 12 16 174 50
Other 2,536 1,806 7,163 6,128
---------- ---------- ---------- ----------
Total noninterest expense 11,134 8,625 31,825 25,946
---------- ---------- ---------- ----------
Income before taxes 6,200 5,736 18,017 15,008
Income tax expense (2,283) (2,097) (6,797 (5,594)
---------- ---------- ---------- ----------
Net income $ 3,917 $ 3,639 $ 11,220 $ 9,414
========== ========== ========== ==========
PER SHARE DATA (PRIMARY AND FULLY DILUTED)
Net income $0.61 $0.57 $1.74 $1.47
========== ========== ========== ==========
Average common stock and common
stock equivalents 6,446,714 6,408,592 6,442,218 6,388,743
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
2
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
NINE MONTHS ENDED
SEPTEMBER 30
--------------------
1996 1995
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES $ 4,368 $ 11,614
--------- --------
INVESTING ACTIVITIES
Cash and due from banks used for acquisitions (10,495) (15,542)
Purchases of securities (52,063) (42,263)
Maturities of securities 52,330 57,147
Proceeds from sales of securities 15,709 4,043
Net decrease in federal funds sold 31,013 21,199
Purchases of loans (9,251) (9,383)
Proceeds from sales of loans 81,587 38,102
Net other increase in loans (111,218) (68,233)
Purchases of premises and equipment (3,361) (2,175)
Proceeds from sales of other real estate owned and repossessed assets 968 1,130
Other, net (520) 608
--------- --------
Net cash used by investing activities (5,301) (15,367)
--------- --------
FINANCING ACTIVITIES
Net decrease in demand, transaction and savings deposits (11,272) (17,263)
Net increase in certificates of deposit 25,028 14,786
Net increase (decrease) in short-term borrowings (8,039) 11,415
Net increase in long-term borrowings 530 810
Issuance of common stock 118 305
Purchase and retirement of common stock -- (577)
Cash dividends paid (1,496) (1,303)
--------- --------
Net cash provided by financing activities 4,869 8,173
--------- --------
Net increase in cash and due from banks 3,936 4,420
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 $ 89,289 $ 57,984
========= ========
SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest $ 24,338 $ 21,042
========= ========
Cash paid during the period for income taxes $ 6,967 $ 5,439
========= ========
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 October 1996, the Company acquired all the assets and assumed
all the liabilities of Commerce Bancorporation, Inc. of McLoud, Oklahoma
("Commerce Bancorp"), which had approximately $18,000 in total assets.
Commerce Bancorp was controlled by certain executive officers of the
Company. The acquisition was accomplished through the exchange of 156,508
shares of common stock of the Company for all of the outstanding common
stock of Commerce Bancorp. The minority shares of Commerce Bancorp's
subsidiary bank were purchased for $102. The acquisition was accounted for
as a book value purchase, which is similar to the pooling of interests
method, although the effect of the acquisition is included in the Company's
consolidated financial statements from the date of the acquisition forward.
The acquisition will not have a material effect on the results of operations
of the Company for 1996.
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. A core deposit intangible of $830 and goodwill of $6,876 were
recorded in the acquisition. Pro forma condensed results of operations, as
though City Bankshares had been acquired January 1, 1995, are as follows:
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
Net interest income $40,961 $49,226
Net income $11,130 $13,122
Net income per common share
and common stock equivalent $ 1.73 $ 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
4
forward. A core deposit intangible of $406 and goodwill of $810 were
recorded in the acquisition. Subsequent payments from the escrow, if any,
to the former shareholders of State 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:
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
Net interest income $32,850 $42,160
Net income $ 9,593 $12,296
Net income per common share
and common stock equivalent $ 1.50 $ 1.91
(2) SECURITIES
The table below summarizes securities held for investment and
securities available for sale.
SEPTEMBER 30, DECEMBER 31,
-------------------
1996 1995 1995
-------- -------- --------
Held for investment, at cost (market value:
$26,154, $42,643 and $42,577, respectively) $ 25,937 $ 42,148 $ 42,005
Available for sale, at market value 256,034 213,201 221,108
-------- -------- --------
Total $281,971 $255,349 $263,113
======== ======== ========
5
BANCFIRST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The Company reported net income of $3.92 million for the quarter
ended September 30, 1996, compared to net income of $3.64 million for the
third quarter of 1995. The growth in earnings was the combined result of
acquisitions in 1995 and 1996 and internal growth. Earnings per share was
$0.61 for the third quarter of 1996, compared to $0.57 per share for the
third quarter of 1995.
Net income for the first nine months of 1996 was $11.2 million,
compared to $9.41 million for the same period of 1995. Year-to-date
earnings per share was $1.74, compared to $1.47 for the first nine months of
1995.
Total assets increased $138 million from December 31, 1995 and
$206 million from September 30, 1995 due to acquisitions having total assets
aggregating approximately $140 million, and internal growth. Stockholders'
equity rose to $106 million, an increase of $8.15 million compared to
December 31, 1995 and $11.7 million compared to September 30, 1995.
RESULTS OF OPERATIONS
THIRD QUARTER
Net interest income increased for the third quarter of 1996 by
$2.67 million, or 23.6%, as compared to the same quarter of 1995, primarily
as a result of earning asset growth. Net interest spread was 4.55% for the
third quarter of 1996, compared to 4.36% for 1995, while average net earning
assets increased $42.3 million. Net interest margin on a taxable equivalent
basis was 5.41% for the third quarter, compared to 5.24% for the same
quarter of 1995.
The Company provided $432,000 for possible loan losses for the
quarter, compared to $150,000 for the same quarter of 1995. Net loan
charge-offs were $269,000 for the third quarter of 1996, compared to
$134,000 for the third quarter of 1995. The net charge-offs in 1996
represent an annualized rate of only 0.15% of total loans.
Noninterest income increased $586,000, or 18.4%, compared to the
third quarter of 1995 due to income added by acquisitions and from increased
mortgage loan activity. Noninterest expense increased $2.51 million, or
29.1%, due to added operating expenses of the banks acquired in 1995 and
1996, and the $542,000 refund of FDIC insurance premiums received in the
third quarter of 1995.
YEAR-TO-DATE
For the first nine months of 1996, net interest income increased
by $7.36 million, or 22.9%, as compared to the first nine months of 1995,
primarily as a result of earning asset growth. Net interest spread was
4.51% for 1996, compared to 4.36% for 1995, while average net earning assets
increased $33.8 million. Net interest margin on a taxable equivalent basis
was 5.33% for the first nine months, compared to 5.22% for the same period
of 1995.
The Company provided $849,000 for possible loan losses for the
year-to-date, compared to $408,000 in 1995. Net loan charge-offs were
$336,000 for 1996, compared to $162,000 for 1995, representing annualized
rates of only 0.06% and 0.04% of total loans, respectively.
Noninterest income increased $1.97 million, or 21.5%, compared to
the first nine months of 1995 due to income added by acquisitions and from
increased mortgage loan activity. Noninterest expense increased $5.88
million, or 22.7%, due to added operating expenses of the banks acquired in
1995 and 1996.
6
FINANCIAL POSITION
Total securities increased $18.9 million compared to December 31,
1995 and $26.6 million compared to September 30, 1995, as a net result of
securities added by acquisitions and maturities of securities used to fund
loan growth. The net unrealized loss on securities available for sale was
$204,000 at the end of the third quarter of 1996, compared to a gain of $2.4
million at December 31 and a gain of $1.36 million at September 30, 1995.
The average taxable equivalent yield on the securities portfolio for the
third quarter increased to 6.35% from 6.07% for the same quarter of 1995.
Total loans increased $112 million from December 31, 1995 and $133
million from September 30, 1995 due to both internal loan growth and
acquisitions. The allowance for possible loan losses increased $1.36
million in the first nine months of 1996 due primarily to purchased reserves
from acquisitions. The allowance as a percentage of total loans was 1.63%,
1.70% and 1.71% at September 30, 1996, December 31, 1995 and September 30,
1995, respectively.
Nonperforming and restructured assets increased slightly in the
first nine months of 1996 to $7.72 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 is only
0.65%, 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 $136 million as compared to December 31,
1995 and $193 million compared to September 30, 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% of total deposits at September 30, 1996.
Short-term borrowings decreased $8.04 million from December 31,
1995 as the net result of the maturity of $15 million in Federal Home Loan
Bank borrowings and an increase in federal funds purchased.
Stockholders' equity rose to $106 million, an increase of $8.15
million compared to year-end 1995 and $11.7 million compared to September
30, 1995. These increases were primarily the result of accumulated
earnings. Average stockholders' equity to average assets dropped slightly
to 8.84% from 9.43% at December 31, 1995 due to an 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 NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- ------------------
1996 1995 1996 1995
------- ------- ------- -------
PER COMMON SHARE DATA:
Net income $ 0.61 $ 0.57 $ 1.74 $ 1.47
Cash dividends declared 0.08 0.07 0.24 0.21
Book value at period end 17.06 15.26
Tangible book value at period 14.71 13.94
end
PERFORMANCE RATIOS:
Return on average assets 1.32% 1.48% 1.32% 1.32%
Return on average common equity 14.93 15.76 14.91 14.24
Increase/(decrease) in tangible 18.81 21.47 2.39 22.46
book value (annualized)
Noninterest expense/(net 62.67 59.44 62.78 62.73
interest income + noninterest
income)
SEPTEMBER 30, DECEMBER 31,
-----------------
1996 1995 1995
------- ------- -------
BALANCE SHEET RATIOS:
Average loans to deposits (year to date) 68.45% 66.66% 67.02%
Allowance for possible loan losses to total loans 1.63 1.71 1.70
Allowance for possible loan losses to nonperforming and 189.31 226.41 216.73
restructured loans
Nonperforming and restructured assets to total assets 0.65 0.70 0.55
CAPITAL RATIOS:
Average stockholders' equity to average assets (year to 8.84% 9.30% 9.43%
date)
Leverage ratio (regulatory minimum 3%) 7.85 8.84 8.55
Total risk-based capital ratio (regulatory minimum 8%) 14.23 16.14 16.02
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------------------
1996 1995
---------------------- --------------------
AVERAGE BALANCES AND NET AVERAGE AVERAGE
INTEREST MARGIN ANALYSIS AVERAGE YIELD/ AVERAGE YIELD/
(TAXABLE EQUIVALENT BASIS): BALANCE RATE BALANCE RATE
------- ------- ------- -------
Loans $ 737,002 9.76% $595,089 10.09%
Investment securities 278,193 6.35 249,596 6.07
Federal funds sold 23,807 5.51 24,729 5.83
---------- --------
Total earning assets 1,039,002 8.75 869,414 8.81
Nonearning assets 134,804 111,036
---------- --------
Total assets $1,173,806 $980,450
========== ========
Interest-bearing deposits $ 822,622 4.19% $696,845 4.44%
Short-term borrowings 1,708 4.66 1,659 5.02
Long-term borrowings 1,486 6.46 -- --
---------- --------
Total interest-bearing 825,816 4.20 698,504 4.45
liabilities
Demand deposits 236,631 183,676
Other noninterest-bearing 7,301 5,908
liabilities
Stockholders' equity 104,058 92,362
---------- --------
Total liabilities and
stockholders' equity $1,173,806 $980,450
========== ========
Net interest spread 4.55% 4.36%
==== ====
Net interest margin 5.41% 5.24%
==== ====
8
PART II. OTHER INFORMATION
---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) Exhibits
EXHIBIT
NUMBER EXHIBIT
- ------- --------------------------------------------------------------------
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).
2.4* Agreement and Plan of Reorganization dated September 26, 1996 between
BancFirst Corporation and Commerce Bancorporation, Inc.
3.0* Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of BancFirst Corporation dated October 25, 1996.
27.1* Financial Data Schedule.
- --------------------------------------------------------------------------------
*Filed herewith
(b) The following reports on Form 8-K have been filed by the Company during the
quarter ended September 30, 1996.
DATE OF
REPORT ITEMS REPORTED
- ------------ ----------------------------------------------------------------
July 1, 1996 Change in Registrant's Certifying Accountant as a result of the
sale of Price Waterhouse LLP's Oklahoma City practice to Coopers
& Lybrand LLP.
10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
November 14, 1996 BANCFIRST CORPORATION
(Registrant)
/s/ Randy Foraker
------------------------------------
Randy P. Foraker
Sr. Vice President, Controller
and Secretary/Treasurer
(Principal Accounting Officer)
11