PR Newswire | Jul 16, 2020 04:30PM EDT

07/16 15:30 CDT

BancFirst Corporation Reports Second Quarter Earnings OKLAHOMA CITY, July 16, 2020

OKLAHOMA CITY, July 16, 2020 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS: BANF) reported net income of $20.7 million, or $0.63 diluted earnings per share, for the second quarter of 2020 compared to net income of $34.2 million, or $1.02 diluted earnings per share, for the second quarter of 2019. The results for the second quarter of 2020 were negatively impacted by a higher provision for loan losses. The second quarter of 2020 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. Net income for the six months ended June 30, 2020 was $43.3 million, or $1.31 per share, compared to $66.0 million, or $1.98 per share, for the first half of 2019.

The provision for loan losses for the second quarter of 2020 was $19.3 million compared to $2.4 million a year ago. BancFirst Corporation Executive Chairman David Rainbolt commented, "Our provision for loan losses remained consistent with the previous quarter as the economic effects of the pandemic continued. It reflects an extension of our modestly optimistic assumption on the timing of the end of the pandemic and the government's stimulus response to it. We believe this view is aligned with those expressed by the Federal Reserve Board indicating a lack of economic clarity. Absent an improvement in this assessment, we would expect provisions in future quarters to continue to be elevated."

The Company's net interest income for the second quarter of 2020 increased to $77.2 million compared to $69.0 million for the second quarter of 2019. The net interest margin for the quarter was 3.54% compared to 3.89% a year ago. The Company had net recoveries for the quarter of less than 0.01% of average loans, compared to net charge-offs of less than 0.01% of average loans for the second quarter of 2019. Noninterest income for the quarter totaled $32.1 million, compared to $34.1 million last year. The decrease in noninterest income is primarily due to a decrease in interchange and deposit charges resulting from lower economic activity. Noninterest expense for the quarter totaled $64.7 million compared to $56.6 million last year. The increase in noninterest expense was primarily due to salary increases in 2020 related to annual merit increases, acquisition of Pegasus bank and pandemic related salary expenses. The Company's effective tax rate was 18.1% compared to 22.0% for the second quarter of 2019.

At June 30, 2020, the Company's total assets were $9.6 billion, an increase of $1.1 billion from December 31, 2019. Debt securities of $608.0 million were up $116.4 million from December 31, 2019. Loans totaled $6.7 billion, an increase of $1.0 billion 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. At June 30, 2020, the balance of the Paycheck Protection Program loans was $851.3 million. The Company's total stockholders' equity was $1.0 billion, an increase of $29.2 million over December 31, 2019.

Nonaccrual loans represent 0.74% of total loans at June 30, 2020, up from 0.32% at year-end 2019. The increase in nonaccrual loans was due to further downgrades of energy loans. The allowance to total loans was 1.33% up from 0.96% at year-end 2019. The allowance to nonaccrual loans was approximately 181% compared to 302% at year-end 2019.

BancFirst Corporation CEO David Harlow commented, "The Company has performed admirably in the face of low energy prices, the pandemic, and the Federal Reserve's zero interest-rate policy. Pre-tax, pre-provision earnings for the quarter and first half of the year were $44.6 million and $92.5 million respectively compared to $46.3 million and $89.0 million for the same periods last year. PPP loan funding, government stimulus checks, a later income tax filing date, and cash conservation by customers combined to cause deposits to increase $914 million or 12% when compared to the end of the first quarter. Economic activity and the rate of unemployment in our region have improved slightly from levels experienced earlier in the quarter following the shuttering of the economy, although loan demand 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 CorporationSummary Financial Information(Dollars in thousands, except per share and share data - Unaudited)

2020 2020 2019 2019 2019

2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr

Condensed Income Statements:

Net interest income $ 77,208 $ 74,073 $ 73,939 $ 72,287 $ 68,792

Provision for loan losses 19,333 19,583 1,412 2,758 2,433

Non-interest income:

Trust revenue 3,368 3,655 3,682 3,490 3,250

Service charges on deposits 16,760 18,804 19,938 19,866 19,114

Securities transactions (595) 50 (9) - 821

Income from sales of loans 1,561 781 1,089 964 868

Insurance commissions 4,443 5,676 5,076 5,535 4,420

Cash management 4,255 4,320 4,258 4,430 4,402

Other 2,290 1,859 1,490 1,342 1,202

Total noninterest income 32,082 35,145 35,524 35,627 34,077

Non-interest expense:

Salaries and employee benefits 42,226 39,756 40,375 40,354 36,124

Occupancy expense, net 3,839 3,546 3,738 3,386 2,953

Depreciation 3,544 3,491 3,355 3,268 3,015

Amortization of intangible assets 968 964 1,007 842 758

Data processing services 1,629 1,692 1,634 1,467 1,262

Net expense from other real estate owned (12) (2,135) (424) 26 97

Marketing and business promotion 1,485 2,355 2,327 2,047 1,919

Deposit insurance 365 136 147 (81) 544

Other 10,607 11,580 14,137 10,882 9,936

Total noninterest expense 64,651 61,385 66,296 62,191 56,608

Income before income taxes 25,306 28,250 41,755 42,965 43,828

Income tax expense 4,576 5,642 6,248 9,597 9,661

Net income $ 20,730 $ 22,608 $ 35,507 $ 33,368 $ 34,167

Per Common Share Data:

Net income-basic $ 0.64 $ 0.69 $ 1.09 $ 1.02 $ 1.04

Net income-diluted 0.63 0.68 1.07 1.00 1.02

Cash dividends declared 0.32 0.32 0.32 0.32 0.30

Common shares outstanding 32,662,691 32,646,691 32,694,268 32,644,018 32,639,588

Average common shares outstanding -

Basic 32,651,262 32,679,587 32,673,438 32,641,902 32,629,146

Diluted 33,075,493 33,287,359 33,366,848 33,327,213 33,317,193

Performance Ratios:

Return on average assets 0.87 % 1.07 % 1.66 % 1.65 % 1.78 %

Return on average stockholders' equity 7.99 8.87 13.76 13.80 14.54

Net interest margin 3.54 3.82 3.78 3.89 3.89

Efficiency ratio 59.16 56.20 60.56 57.63 55.03

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

Six months ended

June 30,

2020 2019

Condensed Income Statements:

Net interest income $ 151,281 $ 135,695

Provision for loan losses 38,916 4,117

Non-interest income:

Trust revenue 7,023 6,427

Service charges on deposits 35,564 36,777

Securities transactions (545) 821

Income from sales of loans 2,342 1,566

Insurance commissions 10,119 9,685

Cash management 8,575 8,178

Other 4,149 2,624

Total noninterest income 67,227 66,078

Non-interest expense:

Salaries and employee benefits 81,982 72,295

Occupancy expense, net 7,385 5,580

Depreciation 7,035 6,000

Amortization of intangible assets 1,932 1,517

Data processing services 3,321 2,742

Net expense from other real estate owned (2,147) (387)

Marketing and business promotion 3,840 4,180

Deposit insurance 501 1,077

Other 22,187 19,810

Total noninterest expense 126,036 112,814

Income before income taxes 53,556 84,842

Income tax expense 10,218 18,838

Net income $ 43,338 $ 66,004

Per Common Share Data:

Net income-basic $ 1.33 $ 2.02

Net income-diluted 1.31 1.98

Cash dividends declared 0.64 0.60

Common shares outstanding 32,662,691 32,639,588

Average common shares outstanding -

Basic 32,665,425 32,620,819

Diluted 33,197,391 33,306,429

Performance Ratios:

Return on average assets 0.96 % 1.74 %

Return on average stockholders' equity 8.42 14.31

Net interest margin 3.67 3.87

Efficiency ratio 57.68 55.91

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

2020 2020 2019 2019 2019

2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr

Balance Sheet Data:

Total assets $ 9,638,657 $ 8,669,096 $ 8,565,758 $ 8,388,816 $ 7,642,021

Interest-bearing deposits with banks 1,583,116 1,356,826 1,646,238 1,476,340 1,518,998

Debt securities 608,031 591,987 491,626 555,575 425,154

Total loans 6,723,060 6,006,065 5,673,144 5,622,897 5,105,302

Allowance for loan losses (89,500) (70,080) (54,238) (55,928) (55,108)

Deposits 8,486,671 7,573,200 7,483,635 7,330,677 6,613,613

Stockholders' equity 1,034,199 1,023,380 1,004,989 979,752 956,380

Book value per common share 31.66 31.35 30.74 30.01 29.30

Tangible book value per common share (non-GAAP)(1) 26.43 26.09 25.50 24.77 26.40

Balance Sheet Ratios:

Average loans to deposits 79.90 % 77.75 % 75.83 % 76.97 % 76.07 %

Average earning assets to total assets 92.24 91.51 91.50 92.23 92.43

Average stockholders' equity to average assets 10.95 12.02 12.04 11.96 12.25

Asset Quality Data:

Past due loans $ 5,382 $ 10,065 $ 11,834 $ 11,215 $ 2,663

Nonaccrual loans (5) 49,477 45,181 17,965 19,995 17,998

Restructured loans 3,213 3,158 18,010 17,504 16,486

Total nonperforming and restructured loans 58,072 58,404 47,809 48,714 37,147

Other real estate owned and repossessed assets 4,948 6,001 6,073 7,055 7,004

Total nonperforming and restructured assets 63,020 64,405 53,882 55,769 44,151

Nonaccrual loans to total loans 0.74 % 0.75 % 0.32 % 0.36 % 0.35 %

Nonaccrual loans to total Non-PPP loans (non- 0.84 0.75 0.32 0.36 0.35 GAAP)(3)

Nonperforming and restructured loans to total loans 0.86 0.97 0.84 0.87 0.73

Nonperforming and restructured loans to total Non-PPP 0.99 0.97 0.84 0.87 0.73 loans (non-GAAP)(3)

Nonperforming and restructured assets to total assets 0.65 0.74 0.63 0.66 0.58

Allowance to total loans 1.33 1.17 0.96 0.99 1.08

Allowance to total Non-PPP loans (non-GAAP)(3) 1.52 1.17 0.96 0.99 1.08

Allowance to nonaccrual loans 180.89 155.11 301.91 279.72 306.20

Allowance to nonperforming and restructured loans 154.12 119.99 113.45 114.81 148.35

Net charge-offs to average loans 0.00 0.02 0.06 0.04 0.01

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

Stockholders' equity $ 1,034,199 $ 1,023,380 $ 1,004,989 $ 979,752 $ 956,380

Less goodwill 149,922 149,923 148,604 147,013 79,749

Less intangible assets, net 20,882 21,850 22,608 24,025 14,936

Tangible stockholders' equity (non-GAAP) $ 863,395 $ 851,607 $ 833,777 $ 808,714 $ 861,695

Common shares outstanding 32,662,691 32,646,691 32,694,268 32,644,018 32,639,588

Tangible book value per common share (non-GAAP) $ 26.43 $ 26.09 $ 25.50 $ 24.77 $ 26.40

(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 lessgoodwill and intangible assets, net, divided by common shares outstanding. Thisamount is a non GAAP financial measure but has been included as it isconsidered to be a critical metric with which to analyze and evaluate thefinancial condition and capital strength of the Company. This measure shouldnot be considered a substitute for operating results determined in accordancewith GAAP.





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

Total loans $ 6,723,060 $ 6,006,065 $ 5,673,144 $ 5,622,897 $ 5,105,302

Less PPP loans 851,297 - - - -

Total Non-PPP loans (non-GAAP) $ 5,871,763 $ 6,006,065 $ 5,673,144 $ 5,622,897 $ 5,105,302

Nonaccrual loans (5) 49,477 45,181 17,965 19,995 17,998

Nonaccrual loans to total Non-PPP loans (non-GAAP) 0.84 % 0.75 % 0.32 % 0.36 % 0.35 %

Total nonperforming and restructured loans 58,072 58,404 47,809 48,714 37,147

Nonperforming and restructured loans to total Non-PPP 0.99 % 0.97 % 0.84 % 0.87 % 0.73 %loans (non-GAAP)

Allowance for loan losses (89,500) (70,080) (54,238) (55,928) (55,108)

Allowance to total Non-PPP loans (non-GAAP) 1.52 % 1.17 % 0.96 % 0.99 % 1.08 %

(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 bytotal loans less Paycheck Protection Program (PPP) loans. Nonperforming andrestructured loans to total Non-PPP loans is nonperforming and restructuredloans, divided by total loans less PPP loans. Allowance to total Non-PPP loansis allowance for loan losses, divided by total loans less PPP loans. Theseamounts are non-GAAP financial measures but have been included as they areconsidered critical metrics with which to analyze and evaluate the financialcondition and capital strength of the Company. These measures should not beconsidered substitutes for operating results determined in accordance withGAAP.

(5) The Small Business Administration (SBA) guarantees approximately $7.7million of nonaccrual loans.

BancFirst CorporationConsolidated Average Balance SheetsAnd Interest Margin AnalysisTaxable Equivalent Basis(Dollars in thousands - Unaudited)

Three Months Ended Six Months Ended

June 30, 2020 June 30, 2020

Interest Average Interest Average

Average Income/ Yield/ Average Income/ Yield/

Balance Expense Rate Balance Expense Rate

ASSETS

Earning assets:

Loans $ 6,693,681 $ 78,978 4.73 % $ 6,232,091 $ 155,636 5.01 %

Securities - taxable 570,456 1,948 1.37 538,674 4,534 1.69

Securities - tax exempt 34,421 321 3.74 25,947 444 3.44

Interest bearing deposits with banks 1,466,634 395 0.11 1,480,203 5,164 0.70

Total earning assets 8,765,192 81,642 3.74 8,276,915 165,778 4.02

Nonearning assets:

Cash and due from banks 198,495 195,088

Interest receivable and other assets 607,549 594,876

Allowance for loan losses (68,259) (59,887)

Total nonearning assets 737,785 730,077

Total assets $ 9,502,977 $ 9,006,992

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest bearing liabilities:

Transaction deposits $ 774,083 $ 169 0.09 % $ 794,955 $ 684 0.17 %

Savings deposits 3,275,394 1,343 0.16 3,147,744 7,592 0.48

Time deposits 700,740 2,238 1.28 699,280 4,874 1.40

Short-term borrowings 4,354 1 0.05 3,401 8 0.46

Long-term borrowings 2,308 - - 1,154 - -

Junior subordinated debentures 26,804 492 7.37 26,804 983 7.35

Total interest bearing liabilities 4,783,683 4,243 0.36 4,673,338 14,141 0.61

Interest free funds:

Noninterest bearing deposits 3,627,609 3,257,976

Interest payable and other liabilities 51,016 43,947

Stockholders' equity 1,040,669 1,031,731

Total interest free funds 4,719,294 4,333,654

Total liabilities $ 9,502,977 $ 9,006,992 and stockholders' equity

Net interest income $ 77,399 $ 151,637

Net interest spread 3.38 % 3.41 %

Effect of interest free funds 0.16 % 0.26 %

Net interest margin 3.54 % 3.67 %

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SOURCE BancFirst