BancFirst Corporation Reports Third Quarter Earnings

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Oct 17, 2019, 16:30 ET

OKLAHOMA CITY, Oct. 17, 2019 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS:BANF) reported net income of $33.4 million, or $1.00 diluted earnings per share, for the third quarter of 2019 compared to net income of $32.9 million, or $0.98 diluted earnings per share, for the third quarter of 2018. Net income for the nine months ended September 30, 2019 was $99.4 million, or $2.98 per share, compared to $93.1 million, or $2.78 per share, for the nine months ended September 30, 2018. On August 15, 2019 the Company completed the acquisition of Pegasus Bank in Dallas, Texas. As a result, the third quarter of 2019 included one-time acquisition related expenses of approximately $3.1 million, which reduced diluted earnings per share by approximately 7 cents for the quarter and the year. On January 11, 2018 the Company completed the acquisitions of two Oklahoma banking corporations. Consequently, the first nine months of 2018 included one-time acquisition related expenses of approximately $2.6 million, which reduced diluted earnings per share by approximately 6 cents.

The Company's net interest income for the third quarter of 2019 increased to $72.3 million compared to $65.7 million for the third quarter of 2018. The net interest margin for the quarter was 3.89% compared to 3.68% a year ago. The increase in margin was primarily due to the higher average federal funds rate in the third quarter of 2019 when compared to the same period in 2018. The provision for loan losses for the third quarter of 2019 was $2.8 million compared to $747,000 a year ago. The increase in provision was primarily due to downgrades of a few commercial loans. Net charge-offs for the full year of 2019 were 0.05% of average loans compared to 0.04% of average loans in 2018. Net charge-offs for the third quarter of 2019 were 0.04% of average loans compared to 0.02% of average loans in 2018. Noninterest income for the quarter totaled $35.6 million, compared to $32.8 million last year. The increase in noninterest income was primarily due to growth in debit card usage fees and sweep fees. Noninterest expense for the quarter totaled $62.2 million compared to $55.8 million last year. The increase in noninterest expense was primarily due to salary increases in 2019 and acquisition related expenses.

At September 30, 2019, the Company's total assets were $8.4 billion, an increase of $814.6 million from December 31, 2018. Securities of $555.6 million were down $216.6 million from December 31, 2018. Loans totaled $5.6 billion, an increase of $638.7 million from December 31, 2018. Deposits totaled $7.3 billion, an increase of $725.2 million from the December 31, 2018 total. The Company's total stockholders' equity was $979.8 million, an increase of $77.0 million over December 31, 2018.

On August 15, 2019, BancFirst Corporation acquired Pegasus Bank ("Pegasus"), for an aggregate cash purchase price of $123.5 million. Pegasus is a Texas state-chartered bank with three banking locations in Dallas, Texas. Upon acquisition, Pegasus had approximately $651.1 million in total assets, $389.9 million in loans, and $603.9 million in deposits. The Bank will continue to operate as "Pegasus Bank" under a separate Texas state-charter and remain an independent subsidiary of BancFirst Corporation. BancFirst Corporation intends to provide an appropriate amount of capital to increase Pegasus Bank's ability to approve larger loans and allow Pegasus to continue to grow their assets.

Asset quality remained strong during the third quarter of 2019. Nonperforming and restructured assets represented 0.67% of total assets at September 30, 2019, virtually unchanged from the prior year. The allowance to total loans was 0.99% down slightly from 1.03% at year-end 2018. The allowance to nonperforming and restructured loans was 114.06% compared to 136.29% at year-end 2018.

BancFirst Corporation CEO David Harlow commented, "The Company reported strong results in the third quarter. Asset quality remained solid and our margin was stable despite the two 25 bps Fed Funds decreases during the quarter. We are pleased to have closed the previously announced Pegasus acquisition during the quarter and look forward to the growth opportunities the Dallas market provides the Company going forward."

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 58 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)

	2019		2019		2019		2018		2018
	3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Condensed Income Statements:
Net interest income	$ 72,287		$ 68,792		$ 66,903		$ 66,888		$ 65,673
Provision for loan losses	2,758		2,433		1,684		1,516		747
Non-interest income:
Trust revenue	3,490		3,250		3,177		3,023		3,281
Service charges on deposits	19,866		19,114		17,663		18,554		18,103
Securities transactions	--		821		--		10		(64)
Income from sales of loans	964		868		698		649		800
Insurance commissions	5,535		4,420		5,265		4,593		5,207
Cash management	4,430		4,402		3,776		3,338		3,383
Other	1,342		1,202		1,422		1,684		2,091
Total noninterest income	35,627		34,077		32,001		31,851		32,801

Non-interest expense:
Salaries and employee benefits	40,354		36,124		36,171		35,530		35,051
Occupancy expense, net	3,386		2,953		2,627		3,307		3,386
Depreciation	3,268		3,015		2,985		2,965		2,733
Amortization of intangible assets	842		758		759		777		740
Data processing services	1,467		1,262		1,480		1,140		1,418
Net expense from other real estate owned	26		97		(484)		130		64
Marketing and business promotion	2,047		1,919		2,261		2,030		1,997
Deposit insurance	(81)		544		533		571		597
Other	10,882		9,936		9,874		9,716		9,823
Total noninterest expense	62,191		56,608		56,206		56,166		55,809
Income before income taxes	42,965		43,828		41,014		41,057		41,918
Income tax expense	9,597		9,661		9,177		8,332		9,035
Net income	$ 33,368		$ 34,167		$ 31,837		$ 32,725		$ 32,883
Per Common Share Data:
Net income-basic	$ 1.02		$ 1.04		$ 0.98		$ 1.00		$ 1.01
Net income-diluted	1.00		1.02		0.96		0.98		0.98
Cash dividends declared	0.32		0.30		0.30		0.30		0.30
Common shares outstanding	32,644,018		32,639,588		32,617,788		32,603,926		32,749,690
Average common shares outstanding -
Basic	32,641,902		32,629,146		32,612,399		32,721,626		32,742,480
Diluted	33,327,213		33,317,193		33,292,852		33,423,458		33,504,143
Performance Ratios:
Return on average assets	1.65	%	1.78	%	1.69	%	1.70	%	1.71	%
Return on average equity	13.80		14.54		14.08		14.48		14.86
Net interest margin	3.89		3.89		3.85		3.77		3.68
Efficiency ratio	57.63		55.03		56.83		56.88		56.67




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

	Nine months ended September 30,
	2019		2018
Condensed Income Statements:
Net interest income	$ 207,982		$ 193,588
Provision for loan losses	6,875		2,286
Non-interest income:
Trust revenue	9,917		9,806
Service charges on deposits	56,643		52,293
Securities transactions	821		37
Income from sales of loans	2,530		2,253
Insurance commissions	15,220		14,333
Cash management	12,608		9,785
Other	3,966		4,841
Total noninterest income	101,705		93,348

Non-interest expense:
Salaries and employee benefits	112,649		104,017
Occupancy expense, net	8,966		10,184
Depreciation	9,268		7,572
Amortization of intangible assets	2,359		2,232
Data processing services	4,209		3,816
Net expense from other real estate owned	(361)		109
Marketing and business promotion	6,227		5,998
Deposit insurance	996		1,856
Other	30,692		30,171
Total noninterest expense	175,005		165,955
Income before income taxes	127,807		118,695
Income tax expense	28,435		25,606
Net income	$ 99,372		$ 93,089
Per Common Share Data:
Net income-basic	$ 3.04		$ 2.85
Net income-diluted	2.98		2.78
Cash dividends declared	0.92		0.72
Common shares outstanding	32,644,018		32,749,690
Average common shares outstanding -
Basic	32,627,924		32,678,310
Diluted	33,314,298		33,430,761
Performance Ratios:
Return on average assets	1.71	%	1.64	%
Return on average stockholders' equity	14.14		14.62
Net interest margin	3.88		3.68
Efficiency ratio	56.51		57.84




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


	2019		2019		2019		2018		2018
	3rd Qtr		2nd Qtr		1st Qtr		4th Qtr		3rd Qtr
Balance Sheet Data:

Total assets	$ 8,388,816		$ 7,642,021		$ 7,709,000		$ 7,574,258		$ 7,602,438
Interest-bearing deposits with banks	1,476,340		1,518,998		1,291,447		1,195,824		1,607,157
Debt securities	555,575		425,154		724,872		772,132		477,080
Total loans	5,622,897		5,105,302		5,050,221		4,984,150		4,952,267
Allowance for loan losses	(55,928)		(55,108)		(52,915)		(51,389)		(51,875)
Deposits	7,330,677		6,613,613		6,706,386		6,605,495		6,643,131
Stockholders' equity	979,752		956,380		927,927		902,789		884,801
Book value per common share	30.01		29.30		28.45		27.69		27.02
Tangible book value per common share (non-GAAP)(1)	24.77		26.40		25.52		24.74		24.06
Balance Sheet Ratios:
Average loans to deposits	77.68	%	76.07	%	75.34	%	74.24	%	74.50	%
Average earning assets to total assets	92.23		92.43		92.42		92.48		92.87
Average stockholders' equity to average assets	11.96		12.25		12.01		11.76		11.51
Asset Quality Data:
Past due loans	$ 11,214		$ 2,663		$ 2,170		$ 1,916		$ 4,073
Nonaccrual loans	20,316		17,998		21,594		22,603		26,880
Restructured loans	17,504		16,486		14,552		13,188		13,557
Total nonperforming and restructured loans	49,034		37,147		38,316		37,707		44,510
Other real estate owned and repossessed assets	7,056		7,004		6,433		6,873		7,072
Total nonperforming and restructured assets	56,090		44,151		44,749		44,580		51,582
Nonperforming and restructured loans to total loans	0.87	%	0.73	%	0.76	%	0.76	%	0.90	%
Nonperforming and restructured assets to total assets	0.67		0.58		0.58		0.59		0.68
Allowance to total loans	0.99		1.08		1.05		1.03		1.05
Allowance to nonperforming and restructured loans	114.06		148.35		138.10		136.29		116.55
Net charge-offs to average loans	0.04		0.01		0.00		0.04		0.02

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

Stockholders' equity	$ 979,752		$ 956,380		$ 927,927		$ 902,789		$ 884,801
Less goodwill	147,013		79,749		79,749		79,749		79,733
Less intangible assets, net	24,025		14,936		15,701		16,470		17,257
Tangible stockholders' equity (non-GAAP)	$ 808,714		$ 861,695		$ 832,477		$ 806,570		$ 787,811
Common shares outstanding	32,644,018		32,639,588		32,617,788		32,603,926		32,749,690
Tangible book value per common share (non-GAAP)	$ 24.77		$ 26.40		$ 25.52		$ 24.74		$ 24.06

(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.




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, 2019				September 30, 2019
			Interest	Average			Interest	Average
		Average	Income/	Yield/		Average	Income/	Yield/
		Balance	Expense	Rate		Balance	Expense	Rate
ASSETS
Earning assets:
	Loans	$ 5,376,278	$ 75,446	5.57	%	$ 5,158,737	$ 215,462	5.58	%
Securities – taxable		427,152	2,361	2.19		613,365	10,551	2.30
Securities – tax exempt		17,399	130	2.96		19,687	439	2.98
Interest bearing deposits with banks		1,577,446	8,705	2.19		1,397,739	24,590	2.35
Total earning assets		7,398,275	86,642	4.65		7,189,528	251,042	4.67

Nonearning assets:
Cash and due from banks		178,862				178,826
Interest receivable and other assets		500,067				469,615
Allowance for loan losses		(56,056)				(53,814)
Total nonearning assets		622,873				594,627
Total assets		$ 8,021,148				$ 7,784,155

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Transaction deposits		$ 737,162	$ 646	0.35	%	$ 743,158	$ 1,967	0.35	%
Savings deposits		2,835,855	10,127	1.42		2,700,393	30,852	1.53
Time deposits		690,867	2,871	1.65		688,056	8,164	1.59
Short-term borrowings		1,063	7	2.72		1,650	29	2.31
Junior subordinated debentures		26,804	491	7.27		26,804	1,474	7.35
Total interest bearing liabilities		4,291,751	14,142	1.31		4,160,061	42,486	1.37

Interest free funds:
Noninterest bearing deposits		2,720,830				2,643,189
Interest payable and other liabilities		49,262				41,138
Stockholders' equity		959,305				939,767
Total interest free funds		3,729,397				3,624,094
Total liabilities and stockholders' equity		$ 8,021,148				$ 7,784,155
Net interest income			$ 72,500				$ 208,556
Net interest spread				3.34	%			3.30	%
Effect of interest free funds				0.55	%			0.58	%
Net interest margin				3.89	%			3.88	%