PR Newswire | Jul 15, 2021 04:20PM EDT

07/15 15:20 CDT

BancFirst Corporation Reports Second Quarter Earnings OKLAHOMA CITY, July 15, 2021

OKLAHOMA CITY, July 15, 2021 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS: BANF) reported net income of $48.2 million, or $1.45 diluted earnings per share, for the second quarter of 2021 compared to net income of $20.7 million, or $0.63 diluted earnings per share, for the second quarter of 2020. Net income for the six months ended June 30, 2021 was $90.7 million, or $2.72 per share, compared to $43.3 million, or $1.31 per share, for the first half of 2020. The Company recorded a net benefit from reversal of provisions for credit losses of $9.9 million for both the second quarter and first half of 2021 compared to a provision for credit losses of $19.3 million for the second quarter of 2020 and $38.9 million for the first half of 2020. Also included in noninterest income and noninterest expense were a purchase gain and acquisition related expenses from the purchase and assumption transaction with The First National Bank and Trust Company of Vinita, Oklahoma, which resulted in a net benefit of approximately $2.0 million.

BancFirst Corporation Executive Chairman David Rainbolt commented, "There has been a 180 degree change in the perception of our economic direction from the second quarter of last year. The massive provisions in 2020 precipitated by the unknown consequences of the pandemic have given way to a stimulus driven economic turnaround both nationally and in Oklahoma. Although some caution remains regarding the sustainability of the recovery and possible effects of virus variants, we would anticipate more modest reserve reversals in the next quarter or two."

The Company's net interest income for the second quarter of 2021 increased to $82.4 million compared to $77.2 million for the second quarter of 2020, due primarily to $11.9 million in fee income from Paycheck Protection Program (PPP) loan forgiveness. The net interest margin for the quarter was 3.32% compared to 3.54% a year ago. Noninterest income for the quarter totaled $44.6 million, compared to $32.1 million last year. The increase in noninterest income was due to the aforementioned purchase gain for The First National Bank and Trust Company of Vinita, Oklahoma, $2.2 million in rental income from other real estate property, and a $2.7 million increase in income from debate card interchange fees. Noninterest expense for the quarter increased to $74.0 million compared to $64.7 million last year, due to approximately $3.4 million related to other real estate property management costs, the aforementioned acquisition related expenses, and $1.3 million in net occupancy and depreciation from the Company's new corporate headquarters. The Company's effective tax rate was 23.4% compared to 18.1% for the second quarter of 2020.

At June 30, 2021, the Company's total assets were $11.0 billion, an increase of $1.8 billion from December 31, 2020. Loans totaled $6.2 billion, a decrease of $241.0 million from December 31, 2020 due primarily to a net decrease of approximately $284 million in PPP loans and approximately $21 million of loans that were sold with the Company's Hugo, Oklahoma branch. Deposits totaled $9.7 billion, an increase of $1.7 billion from December 31, 2020. The increase in assets and deposits was primarily related to PPP and other government stimulus payments. At June 30, 2021, the balance of PPP loans was $368.6 million. The Company's total stockholders' equity was $1.1 billion, an increase of $63.7 million over December 31, 2020. Off-balance sheet sweep accounts totaled $2.6 billion at June 30, 2021 compared to $2.8 billion at December 31, 2020.

Nonaccrual loans represent 0.48% of total loans at June 30, 2021, down from 0.58% at year-end 2020. Net charge-offs for the quarter were 0.06% of average loans, compared to none in the second quarter of 2020. The allowance for credit losses to total loans was 1.35% at June 30, 2021 compared to 1.42% at year-end 2020, and the allowance for credit losses to nonaccrual loans was 281.73% compared to 243.35% at year-end 2020. At June 30, 2021, the Company's nonaccrual loans decreased $7.7 million from year-end 2020, due to resolutions of several loans, which was slightly offset by $7.3 million of nonaccrual loans acquired from The First National Bank and Trust Company of Vinita, Oklahoma. At June 30, 2021, the Company's other real estate owned (OREO) increased $8.0 million from December 31, 2020, and included approximately $4.0 million due to the repossession of one commercial real estate property, $2.4 million from the decommissioning of the Company's previous headquarters, and $2.5 million acquired from The First National Bank and Trust Company of Vinita, Oklahoma.

On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $60 million aggregate principal amount of 3.50% Fixed-to-Floating Rate Subordinated Notes due 2036 (the "Subordinated Notes") to various institutional accredited investors. The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. The net proceeds to the Company from the sale of the Subordinated Notes was approximately $59.15 million after deducting commissions and offering expenses. The Company expects to use the proceeds from the sale of the Subordinated Notes for general corporate purposes.

On May 20, 2021, the Company completed the purchase and assumption transaction with The First National Bank and Trust Company of Vinita, Oklahoma to purchase certain of its assets and assume its deposits and certain other obligations. The First National Bank and Trust Company of Vinita had banking locations in Vinita and Grove, Oklahoma. These banking locations became branches of BancFirst. The Company purchased approximately $284 million in total assets, $195 million in loans, and $256 million in deposits.

BancFirst Corporation CEO David Harlow commented, "The story for the quarter and for the first six months of the year is the reversal of loan loss reserve compared to significant provisions in the first half of 2020 in addition to the continued realization of PPP loan fees as a result of ongoing PPP loan forgiveness. Our margin (absent non-recurring PPP loan fees) continues to be under pressure as government stimulus driven deposit growth has far outstripped loan growth. Our challenge for the remainder of 2021 and into 2022 will be to sustain the trajectory of non-interest income growth while generating loan growth in the emerging post-pandemic economy."

BancFirst Corporation (the Company) is an Oklahoma based financial services holding company. The Company operates two subsidiary banks, BancFirst, an Oklahoma state-chartered bank with 106 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)

2021 2021 2020 2020 2020

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

Condensed Income Statements:

Net interest income $ 82,363 $ 77,206 $ 79,535 $ 75,852 $ 77,208

(Benefit from) provision for credit losses (9,949) - 4,992 18,740 19,333

Non-interest income:

Trust revenue 3,264 3,102 2,976 3,131 3,368

Service charges on deposits 20,524 19,100 19,796 19,078 16,760

Securities transactions 172 95 156 - (595)

Income from sales of loans 2,133 2,010 1,852 1,873 1,561

Insurance commissions 5,015 5,989 5,680 5,197 4,443

Cash management 3,068 3,003 3,135 3,701 4,255

Other 10,442 6,636 1,825 1,595 2,290

Total noninterest income 44,618 39,935 35,420 34,575 32,082

Non-interest expense:

Salaries and employee benefits 41,992 39,577 40,750 41,995 42,226

Occupancy expense, net 4,528 4,348 4,533 4,503 3,839

Depreciation 4,133 3,877 3,779 3,795 3,544

Amortization of intangible assets 809 793 915 968 968

Data processing services 1,660 1,678 1,763 1,669 1,629

Net expense from other real estate owned 3,357 1,510 420 196 (12)

Marketing and business promotion 1,648 1,879 1,671 1,485 1,485

Deposit insurance 766 876 857 723 365

Other 15,130 10,425 10,923 10,749 10,607

Total noninterest expense 74,023 64,963 65,611 66,083 64,651

Income before income taxes 62,907 52,178 44,352 25,604 25,306

Income tax expense 14,715 9,658 8,994 4,714 4,576

Net income $ 48,192 $ 42,520 $ 35,358 $ 20,890 $ 20,730

Per Common Share Data:

Net income-basic $ 1.47 $ 1.30 $ 1.08 $ 0.64 $ 0.64

Net income-diluted 1.45 1.27 1.06 0.63 0.63

Cash dividends declared 0.34 0.34 0.34 0.34 0.32

Common shares outstanding 32,784,513 32,771,013 32,719,852 32,679,191 32,662,691

Average common shares outstanding -

Basic 32,779,227 32,756,852 32,690,296 32,668,789 32,651,262

Diluted 33,405,923 33,408,116 33,275,550 33,168,938 33,075,493

Performance Ratios:

Return on average assets 1.79 % 1.69 % 1.45 % 0.86 % 0.88 %

Return on average stockholders' equity 17.42 15.90 13.25 7.89 7.99

Net interest margin 3.32 3.36 3.54 3.40 3.54

Efficiency ratio 58.29 55.46 57.08 59.84 59.16

BancFirst Corporation

Summary Financial Information

(Dollars in thousands, except per share and share data - Unaudited)

Six months ended

June 30,

2021 2020

Condensed Income Statements:

Net interest income $ 159,569 $ 151,281

(Benefit from) provision for credit losses (9,949) 38,916

Non-interest income:

Trust revenue 6,366 7,023

Service charges on deposits 39,624 35,564

Securities transactions 267 (545)

Income from sales of loans 4,143 2,342

Insurance commissions 11,004 10,119

Cash management 6,071 8,575

Other 17,078 4,149

Total noninterest income 84,553 67,227

Non-interest expense:

Salaries and employee benefits 81,569 81,982

Occupancy expense, net 8,876 7,385

Depreciation 8,010 7,035

Amortization of intangible assets 1,602 1,932

Data processing services 3,338 3,321

Net expense from other real estate owned 4,867 (2,147)

Marketing and business promotion 3,527 3,840

Deposit insurance 1,642 501

Other 25,555 22,187

Total noninterest expense 138,986 126,036

Income before income taxes 115,085 53,556

Income tax expense 24,373 10,218

Net income $ 90,712 $ 43,338

Per Common Share Data:

Net income-basic $ 2.77 $ 1.33

Net income-diluted 2.72 1.31

Cash dividends declared 0.68 0.64

Common shares outstanding 32,784,513 32,662,691

Average common shares outstanding -

Basic 32,768,102 32,665,425

Diluted 33,407,693 33,197,391

Performance Ratios:

Return on average assets 1.74 % 0.97 %

Return on average stockholders' equity 16.67 8.42

Net interest margin 3.34 3.68

Efficiency ratio 56.93 57.68

BancFirst Corporation

Summary Financial Information

(Dollars in thousands, except per share and share data - Unaudited)

2021 2021 2020 2020 2020

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

Balance Sheet Data:

Total assets $ 11,015,287 $ 10,549,305 $ 9,212,357 $ 9,618,868 $ 9,612,453

Interest-bearing deposits with banks 4,475,941 2,788,316 1,336,394 1,609,462 1,583,116

Debt securities 563,771 520,543 555,196 596,941 608,031

Total loans 6,207,262 6,380,108 6,448,225 6,660,694 6,696,856

Allowance for credit losses (83,963) (90,860) (91,366) (106,126) (89,500)

Deposits 9,728,389 9,371,940 8,064,704 8,495,891 8,486,671

Stockholders' equity 1,131,591 1,094,671 1,067,885 1,043,752 1,034,199

Book value per common share 34.52 33.40 32.64 31.94 31.66

Tangible book value per common share (non-GAAP)(1) 29.35 28.27 27.47 26.74 26.43

Balance Sheet Ratios:

Average loans to deposits 65.36 % 70.84 % 77.02 % 78.55 % 79.78 %

Average earning assets to total assets 92.01 91.54 91.82 91.99 92.23

Average stockholders' equity to average assets 10.25 10.64 10.91 10.90 10.96

Asset Quality Data:

Past due loans $ 4,386 $ 5,282 $ 4,802 $ 6,412 $ 5,382

Nonaccrual loans (5) 29,802 35,326 37,545 82,385 49,477

Restructured loans 7,485 7,801 7,784 2,837 3,213

Total nonperforming and restructured loans 41,673 48,409 50,131 91,634 58,072

Other real estate owned and repossessed assets 40,183 30,320 32,480 4,939 4,948

Total nonperforming and restructured assets 81,856 78,729 82,611 96,573 63,020

Nonaccrual loans to total loans 0.48 % 0.55 % 0.58 % 1.24 % 0.74 %

Nonaccrual loans to total Non-PPP loans (non-GAAP)(3) 0.51 0.62 0.65 1.41 0.84

Nonperforming and restructured loans to total loans 0.67 0.76 0.78 1.38 0.87

Nonperforming and restructured loans to total Non-PPP loans 0.71 0.85 0.86 1.57 0.99 (non-GAAP)(3)

Nonperforming and restructured assets to total assets 0.74 0.75 0.90 1.00 0.66

Allowance for credit losses to total loans 1.35 1.42 1.42 1.59 1.34

Allowance for credit losses to total Non-PPP loans (non-GAAP)(3) 1.44 1.60 1.58 1.82 1.52

Allowance for credit losses to nonaccrual loans 281.73 257.20 243.35 128.82 180.89

Allowance for credit losses to nonperforming and restructured loans 201.48 187.69 182.26 115.81 154.12

Net charge-offs to average loans 0.06 0.01 0.30 0.03 0.00

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

Stockholders' equity $ 1,131,591 $ 1,094,671 $ 1,067,885 $ 1,043,752 $ 1,034,199

Less goodwill 149,922 149,922 149,922 149,922 149,922

Less intangible assets, net 19,283 18,206 18,999 19,914 20,882

Tangible stockholders' equity (non-GAAP) $ 962,386 $ 926,543 $ 898,964 $ 873,916 $ 863,395

Common shares outstanding 32,784,513 32,771,013 32,719,852 32,679,191 32,662,691

Tangible book value per common share (non-GAAP) $ 29.35 $ 28.27 $ 27.47 $ 26.74 $ 26.43

(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 $ 6,207,262 $ 6,380,108 $ 6,448,225 $ 6,660,694 $ 6,696,856

Less PPP loans 368,620 713,714 652,693 831,703 825,093

Total Non-PPP loans (non-GAAP) $ 5,838,642 $ 5,666,394 $ 5,795,532 $ 5,828,991 $ 5,871,763

Nonaccrual loans (5) 29,802 35,326 37,545 82,385 49,477

Nonaccrual loans to total Non-PPP loans (non-GAAP) 0.51 % 0.62 % 0.65 % 1.41 % 0.84 %

Total nonperforming and restructured loans 41,673 48,409 50,131 91,634 58,072

Nonperforming and restructured loans to total Non-PPP loans 0.71 % 0.85 % 0.86 % 1.57 % 0.99 % (non-GAAP)

Allowance for credit losses (83,963) (90,860) (91,366) (106,126) (89,500)

Allowance for credit losses to total Non-PPP loans (non-GAAP) 1.44 % 1.60 % 1.58 % 1.82 % 1.52 %

(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 guarantee approximately $3.5 million of nonaccrual loans at June 30, 2021.

BancFirst Corporation

Consolidated Average Balance Sheets

And Interest Margin Analysis

Taxable Equivalent Basis

(Dollars in thousands - Unaudited)

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2021

Interest Average Interest Average

Average Income/ Yield/ Average Income/ Yield/

Balance Expense Rate Balance Expense Rate

ASSETS

Earning assets:

Loans $ 6,300,418 $ 82,598 5.26 % $ 6,350,354 $ 160,363 5.09 %

Securities - taxable 534,774 1,602 1.20 528,272 3,295 1.26

Securities - tax exempt 15,058 88 2.35 17,187 177 2.08

Interest bearing deposits with banks and FFS 3,111,009 825 0.11 2,751,005 1,420 0.10

Total earning assets 9,961,259 85,113 3.43 9,646,818 165,255 3.45

Nonearning assets:

Cash and due from banks 274,168 271,523

Interest receivable and other assets 684,089 683,978

Allowance for credit losses (92,899) (91,731)

Total nonearning assets 865,358 863,770

Total assets $ 10,826,617 $ 10,510,588

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest bearing liabilities:

Transaction deposits $ 856,800 $ 156 0.07 % $ 812,145 $ 304 0.08 %

Savings deposits 3,692,119 939 0.10 3,598,589 2,045 0.11

Time deposits 657,473 908 0.55 657,704 1,976 0.61

Short-term borrowings 2,145 - 0.06 2,534 1 0.05

Junior subordinated debentures 27,454 578 8.44 27,131 1,069 7.94

Total interest bearing liabilities 5,235,991 2,581 0.20 5,098,103 5,395 0.21

Interest free funds:

Noninterest bearing deposits 4,432,892 4,270,391

Interest payable and other liabilities 47,868 44,713

Stockholders' equity 1,109,866 1,097,381

Total interest free funds 5,590,626 5,412,485

Total liabilities and stockholders' equity $ 10,826,617 $ 10,510,588

Net interest income $ 82,532 $ 159,860

Net interest spread 3.23 % 3.24 %

Effect of interest free funds 0.09 % 0.10 %

Net interest margin 3.32 % 3.34 %

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SOURCE BancFirst