BancFirst Corporation Reports Third Quarter Earnings

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Oct 15, 2020, 16:15 ET

OKLAHOMA CITY, Oct. 15, 2020 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS:BANF) reported net income of $20.9 million, or $0.63 diluted earnings per share, for the third quarter of 2020 compared to net income of $33.4 million, or $1.00 diluted earnings per share, for the third quarter of 2019. The results for the third quarter and first nine months of 2020 were negatively impacted by a higher provision for credit losses. Net income for the nine months ended September 30, 2020 was $64.2 million, or $1.94 per share, compared to $99.4 million, or $2.98 per share, for the nine months ended September 30, 2019. Net income for the third quarter and first nine months of 2020 also includes the net income of Pegasus Bank in Dallas, Texas, which was acquired on August 15, 2019, and the income and expenses associated with the purchase of assets and assumption of liabilities on March 5, 2020, from The Citizens State Bank of Okemah.

The provision for credit losses for the third quarter of 2020 was $18.7 million compared to $2.8 million a year ago. BancFirst Corporation Executive Chairman David Rainbolt commented, "Our provision for credit losses remained consistent with previous quarters as little clarity or improvement was projected for the economic effects of the pandemic. It reflects an extension, for yet another quarter, of our assumption on the timing of the end of the pandemic and the government's stimulus response to it. We believe this view continues to be aligned with that expressed by the Federal Reserve Board indicating a lack of economic certainty. Absent an improvement in this assessment, we would expect provisions in future quarters to continue to be elevated from historical levels."

The Company's net interest income for the third quarter of 2020 increased to $75.9 million compared to $72.3 million for the third quarter of 2019. The net interest margin for the quarter was 3.40% compared to 3.89% a year ago. The Company had net charge-offs for the quarter of 0.03% of average loans, compared to net charge-offs of 0.04% of average loans for the third quarter of 2019. Noninterest income for the quarter totaled $34.6 million, compared to $35.6 million last year. The decrease in noninterest income is primarily due to a decrease in deposit charges resulting from lower economic activity. Noninterest expense for the quarter totaled $66.1 million compared to $62.2 million last year. The increase in noninterest expense was primarily due to salary increases in 2020 related to annual merit increases and the acquisition of Pegasus bank in August 2019. The Company's effective tax rate was 18.4% compared to 22.3% for the third quarter of 2019.

At September 30, 2020, the Company's total assets were $9.6 billion, an increase of $1.1 billion from December 31, 2019. Debt securities of $597.0 million were up $105.3 million from December 31, 2019. Loans totaled $6.7 billion, an increase of $987.6 million from December 31, 2019. Deposits totaled $8.5 billion, an increase of $1.0 billion from the December 31, 2019 total. The increase in assets, loans and deposits were primarily related to the Paycheck Protection Program (PPP) and other government stimulus. At September 30, 2020, the balance of the Paycheck Protection Program loans was $831.7 million. The Company's total stockholders' equity was $1.0 billion, an increase of $38.8 million over December 31, 2019.

Nonaccrual loans represent 1.24% of total loans at September 30, 2020, up from 0.32% at year-end 2019. The allowance to total loans was 1.59% up from 0.96% at year-end 2019. The allowance to nonaccrual loans was approximately 129% compared to 302% at year-end 2019.

BancFirst Corporation CEO David Harlow commented, "Pre-tax, pre-provision earnings for the quarter and first nine months of the year were $44.3 million and $136.8 million respectively compared to $45.7 million and $134.7 million for the same periods last year. Government stimulus and changes in consumer and business spending patterns have combined to increase deposits $1 billion since year-end. Economic activity and the rate of unemployment in our region have improved from levels experienced in the early months of the pandemic; however, loan demand continues to be soft and year to date loan growth absent PPP has been modest."

BancFirst Corporation (the Company) is an Oklahoma based financial services holding company. The Company operates two subsidiary banks, BancFirst, is Oklahoma's largest state-chartered bank with 108 banking locations serving 59 communities across Oklahoma, and Pegasus Bank, with 3 banking locations in Dallas, TX. More information can be found at www.bancfirst.bank.

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. Actual results may differ materially from forward-looking statements.

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)

	2020			2020			2020			2019			2019
	3rd Qtr			2nd Qtr			1st Qtr			4th Qtr			3rd Qtr
Condensed Income Statements:
Net interest income	$	75,852		$	77,208		$	74,073		$	73,939		$	72,287
Provision for credit losses		18,740			19,333			19,583			1,412			2,758
Non-interest income:
Trust revenue		3,131			3,368			3,655			3,682			3,490
Service charges on deposits		19,078			16,760			18,804			19,938			19,866
Securities transactions		—			(595)			50			(9)			—
Income from sales of loans		1,873			1,561			781			1,089			964
Insurance commissions		5,197			4,443			5,676			5,076			5,535
Cash management		3,701			4,255			4,320			4,258			4,430
Other		1,595			2,290			1,859			1,490			1,342
Total noninterest income		34,575			32,082			35,145			35,524			35,627

Non-interest expense:
Salaries and employee benefits		41,995			42,226			39,756			40,375			40,354
Occupancy expense, net		4,503			3,839			3,546			3,738			3,386
Depreciation		3,795			3,544			3,491			3,355			3,268
Amortization of intangible assets		968			968			964			1,007			842
Data processing services		1,669			1,629			1,692			1,634			1,467
Net expense from other real estate owned		196			(12)			(2,135)			(424)			26
Marketing and business promotion		1,485			1,485			2,355			2,327			2,047
Deposit insurance		723			365			136			147			(81)
Other		10,749			10,607			11,580			14,137			10,882
Total noninterest expense		66,083			64,651			61,385			66,296			62,191
Income before income taxes		25,604			25,306			28,250			41,755			42,965
Income tax expense		4,714			4,576			5,642			6,248			9,597
Net income	$	20,890		$	20,730		$	22,608		$	35,507		$	33,368
Per Common Share Data:
Net income-basic	$	0.64		$	0.64		$	0.69		$	1.09		$	1.02
Net income-diluted		0.63			0.63			0.68			1.07			1.00
Cash dividends declared		0.34			0.32			0.32			0.32			0.32
Common shares outstanding		32,679,191			32,662,691			32,646,691			32,694,268			32,644,018
Average common shares outstanding -
Basic		32,668,789			32,651,262			32,679,587			32,673,438			32,641,902
Diluted		33,168,938			33,075,493			33,287,359			33,366,848			33,327,213
Performance Ratios:
Return on average assets		0.86	%		0.88	%		1.07	%		1.66	%		1.65	%
Return on average stockholders' equity		7.89			7.99			8.87			13.76			13.80
Net interest margin		3.40			3.54			3.82			3.78			3.89
Efficiency ratio		59.84			59.16			56.20			60.56			57.63

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)

	Nine months ended
	September 30,
	2020			2019
Condensed Income Statements:
Net interest income	$	227,133		$	207,982
Provision for credit losses		57,656			6,875
Non-interest income:
Trust revenue		10,154			9,917
Service charges on deposits		54,642			56,643
Securities transactions		(545)			821
Income from sales of loans		4,215			2,530
Insurance commissions		15,316			15,220
Cash management		12,276			12,608
Other		5,744			3,966
Total noninterest income		101,802			101,705

Non-interest expense:
Salaries and employee benefits		123,977			112,649
Occupancy expense, net		11,888			8,966
Depreciation		10,830			9,268
Amortization of intangible assets		2,900			2,359
Data processing services		4,990			4,209
Net expense from other real estate owned		(1,951)			(361)
Marketing and business promotion		5,325			6,227
Deposit insurance		1,224			996
Other		32,936			30,692
Total noninterest expense		192,119			175,005
Income before income taxes		79,160			127,807
Income tax expense		14,932			28,435
Net income	$	64,228		$	99,372
Per Common Share Data:
Net income-basic	$	1.97		$	3.04
Net income-diluted		1.94			2.98
Cash dividends declared		0.98			0.92
Common shares outstanding		32,679,191			32,644,018
Average common shares outstanding -
Basic		32,666,554			32,627,924
Diluted		33,190,294			33,314,298
Performance Ratios:
Return on average assets		0.93	%		1.71	%
Return on average stockholders' equity		8.24			14.14
Net interest margin		3.58			3.88
Efficiency ratio		58.41			56.51

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)


	2020		2020		2020		2019		2019
	3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Balance Sheet Data:

Total assets	$ 9,618,728		$ 9,612,453		$ 8,669,096		$ 8,565,758		$ 8,388,816
Interest-bearing deposits with banks	1,609,462		1,583,116		1,356,826		1,646,238		1,476,340
Debt securities	596,941		608,031		591,987		491,626		555,575
Total loans	6,660,694		6,696,856		6,006,065		5,673,144		5,622,897
Allowance for credit losses	(106,126)		(89,500)		(70,080)		(54,238)		(55,928)
Deposits	8,495,751		8,486,671		7,573,200		7,483,635		7,330,677
Stockholders' equity	1,043,752		1,034,199		1,023,380		1,004,989		979,752
Book value per common share	31.94		31.66		31.35		30.74		30.01
Tangible book value per common share (non-GAAP)(1)	26.74		26.43		26.09		25.50		24.77
Balance Sheet Ratios:
Average loans to deposits	78.55	%	79.78	%	77.75	%	75.83	%	76.97	%
Average earning assets to total assets	91.99		92.23		91.51		91.50		92.23
Average stockholders' equity to average assets	10.90		10.96		12.02		12.04		11.96
Asset Quality Data:
Past due loans	$ 6,412		$ 5,382		$ 10,065		$ 11,834		$ 11,215
Nonaccrual loans (5)	82,385		49,477		45,181		17,965		19,995
Restructured loans	7,032		3,213		3,158		18,010		17,504
Total nonperforming and restructured loans	95,829		58,072		58,404		47,809		48,714
Other real estate owned and repossessed assets	4,939		4,948		6,001		6,073		7,055
Total nonperforming and restructured assets	100,768		63,020		64,405		53,882		55,769
Nonaccrual loans to total loans	1.24	%	0.74	%	0.75	%	0.32	%	0.36	%
Nonaccrual loans to total Non-PPP loans (non-GAAP)(3)	1.41		0.84		0.75		0.32		0.36
Nonperforming and restructured loans to total loans	1.44		0.87		0.97		0.84		0.87
Nonperforming and restructured loans to total Non-PPP loans (non-GAAP)(3)	1.64		0.99		0.97		0.84		0.87
Nonperforming and restructured assets to total assets	1.05		0.66		0.74		0.63		0.66
Allowance to total loans	1.59		1.34		1.17		0.96		0.99
Allowance to total Non-PPP loans (non-GAAP)(3)	1.82		1.52		1.17		0.96		0.99
Allowance to nonaccrual loans	128.82		180.89		155.11		301.91		279.72
Allowance to nonperforming and restructured loans	110.74		154.12		119.99		113.45		114.81
Net charge-offs to average loans	0.03		0.00		0.02		0.06		0.04

Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(2):

Stockholders' equity	$ 1,043,752		$ 1,034,199		$ 1,023,380		$ 1,004,989		$ 979,752
Less goodwill	149,922		149,922		149,923		148,604		147,013
Less intangible assets, net	19,914		20,882		21,850		22,608		24,025
Tangible stockholders' equity (non-GAAP)	$ 873,916		$ 863,395		$ 851,607		$ 833,777		$ 808,714
Common shares outstanding	32,679,191		32,662,691		32,646,691		32,694,268		32,644,018
Tangible book value per common share (non-GAAP)	$ 26.74		$ 26.43		$ 26.09		$ 25.50		$ 24.77

(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.
Reconciliation of Non-PPP loan ratios (non-GAAP)(4):

Total loans	$ 6,660,694		$ 6,696,856		$ 6,006,065		$ 5,673,144		$ 5,622,897
Less PPP loans	831,703		825,093		-		-		-
Total Non-PPP loans (non-GAAP)	$ 5,828,991		$ 5,871,763		$ 6,006,065		$ 5,673,144		$ 5,622,897
Nonaccrual loans (5)	82,385		49,477		45,181		17,965		19,995
Nonaccrual loans to total Non-PPP loans (non-GAAP)	1.41	%	0.84	%	0.75	%	0.32	%	0.36	%
Total nonperforming and restructured loans	95,829		58,072		58,404		47,809		48,714
Nonperforming and restructured loans to total Non-PPP loans (non-GAAP)	1.64	%	0.99	%	0.97	%	0.84	%	0.87	%
Allowance for credit losses	(106,126)		(89,500)		(70,080)		(54,238)		(55,928)
Allowance to total Non-PPP loans (non-GAAP)	1.82	%	1.52	%	1.17	%	0.96	%	0.99	%

(3) Refer to the "Reconciliation of Non-PPP loan ratios (non-GAAP)" Table.
(4) Nonaccrual loans to total Non-PPP loans is nonaccrual loans, divided by total loans less Paycheck Protection Program (PPP) loans. Nonperforming and restructured loans to total Non-PPP loans is nonperforming and restructured loans, divided by total loans less PPP loans. Allowance to total Non-PPP loans is allowance for credit losses, divided by total loans less PPP loans. These amounts are non-GAAP financial measures but have been included as they are considered critical metrics with which to analyze and evaluate the financial condition and capital strength of the Company. These measures should not be considered substitutes for operating results determined in accordance with GAAP. (5) Government agencies guarantees approximately $8.4 million of nonaccrual loans.

BancFirst Corporation
Consolidated Average Balance Sheets
And Interest Margin Analysis
Taxable Equivalent Basis
(Dollars in thousands - Unaudited)

	Three Months Ended				Nine Months Ended
	September 30, 2020				September 30, 2020
		Interest	Average			Interest	Average
	Average	Income/	Yield/		Average	Income/	Yield/
	Balance	Expense	Rate		Balance	Expense	Rate
ASSETS
Earning assets:
Loans	$ 6,671,344	$ 76,744	4.56	%	$ 6,376,221	$ 232,380	4.85	%
Securities – taxable	591,933	2,032	1.36		556,557	6,665	1.60
Securities – tax exempt	33,785	166	1.95		28,579	485	2.26
Interest bearing deposits with banks	1,567,437	422	0.11		1,509,493	5,586	0.49
Total earning assets	8,864,499	79,364	3.55		8,470,850	245,116	3.85

Nonearning assets:
Cash and due from banks	241,160				210,558
Interest receivable and other assets	619,570				603,167
Allowance for credit losses	(88,823)				(69,603)
Total nonearning assets	771,907				744,122
Total assets	$ 9,636,406				$ 9,214,972

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Transaction deposits	$ 678,447	$ 125	0.07	%	$ 755,835	$ 809	0.14	%
Savings deposits	3,393,158	890	0.10		3,230,145	8,482	0.35
Time deposits	699,074	1,839	1.04		699,211	6,713	1.28
Short-term borrowings	3,117	-	0.05		3,306	8	0.33
Long-term borrowings	2,119	-	-		1,478	-	-
Junior subordinated debentures	26,804	491	7.27		26,804	1,474	7.33
Total interest bearing liabilities	4,802,719	3,345	0.28		4,716,779	17,486	0.49

Interest free funds:
Noninterest bearing deposits	3,722,973				3,414,106
Interest payable and other liabilities	60,574				46,175
Stockholders' equity	1,050,140				1,037,912
Total interest free funds	4,833,687				4,498,193
Total liabilities and stockholders' equity	$ 9,636,406				$ 9,214,972
Net interest income		$ 76,019				$ 227,630
Net interest spread			3.27	%			3.36	%
Effect of interest free funds			0.13	%			0.22	%
Net interest margin			3.40	%			3.58	%