3 unchanged sentences
(Dollars in thousands)
−Removed: September 30,
Cash and due from banks
30 unchanged sentences
Retained earnings
−Removed: Accumulated other comprehensive (loss) income, net of tax of $ 25,439
+Added: Accumulated other comprehensive loss, net of tax benefit of $ 17,603
and $ 22,107 , respectively
6 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
INTEREST INCOME
9 unchanged sentences
Net interest income
−Removed: Provision for (benefit from) credit losses
−Removed: Net interest income after provision for (benefit from) credit losses
+Added: Provision for credit losses
+Added: Net interest income after provision for credit losses
NONINTEREST INCOME
20 unchanged sentences
OTHER COMPREHENSIVE (LOSS)/GAIN
−Removed: Unrealized losses on debt securities, net of tax of $ 11,033 , $ 172 , $ 26,492 and $ 980 , respectively
−Removed: Reclassification adjustment for losses included in net income, net of tax of $ 0 , $ 0 , $( 369 ) and $ 0 , respectively
−Removed: Other comprehensive loss, net of tax of $ 11,033 , $ 172 , $ 26,123 and $ 980 , respectively
+Added: Unrealized income/(losses) on debt securities, net of tax (expense)/benefit of $( 4,504 ) and $ 10,219 , respectively
+Added: Reclassification adjustment for losses included in net income, net of tax expense of $ 0 and $ 369 , respectively
+Added: Other comprehensive income/(loss), net of tax (expense)/benefit of $( 4,504 ) and $ 9,850 , respectively
Comprehensive income
4 unchanged sentences
Three Months Ended
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: September 30,
Issued at beginning of period
Shares issued for stock options
−Removed: Shares acquired and canceled
Issued at end of period
2 unchanged sentences
Common stock issued for stock options
−Removed: Net cash settlement of options
Stock-based compensation arrangements
3 unchanged sentences
Dividends on common stock ($ 0.40 and $ 0.36 per share, respectively)
−Removed: Net cash settlement of options
−Removed: Common stock acquired and canceled
Balance at end of period
8 unchanged sentences
(Dollars in thousands)
−Removed: Nine Months Ended
−Removed: September 30,
+Added: Three Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile to net cash provided by operating activities:
−Removed: Provision for (benefit from) credit losses
+Added: Provision for credit losses
Depreciation and amortization
Net amortization of securities premiums and discounts
−Removed: Realized securities losses/(gains)
+Added: Realized securities losses
Gain on sales of loans
1 unchanged sentence
Cash disbursements for loans originated for sale
−Removed: Deferred income tax (benefit)/provision
+Added: Deferred income tax benefit
Gain on sale of other assets
−Removed: (Decrease)/increase in interest receivable
+Added: Increase in interest receivable
Increase in interest payable
4 unchanged sentences
Net cash received from acquisitions, net of cash paid
−Removed: Net cash paid from sale of assets and liabilities, net of cash received
−Removed: Net (increase)/decrease in federal funds sold
−Removed: Purchases of held for investment debt securities
+Added: Net decrease/(increase) in federal funds sold
Purchases of available for sale debt securities
5 unchanged sentences
Net change in loans
−Removed: Net payments on derivative asset contracts
+Added: Net receipts/(payments) on derivative asset contracts
Purchases of premises, equipment and computer software
Purchase of tax credits
−Removed: Net cash (used in) provided by investing activities
+Added: Net cash used in investing activities
FINANCING ACTIVITIES
1 unchanged sentence
Net change in short-term borrowings
−Removed: Proceeds from issuance of subordinated notes, net of debt issuance costs
Issuance of common stock in connection with stock options, net
−Removed: Common stock acquired
−Removed: Net cash settlement of options
Cash dividends paid
−Removed: Net cash provided by financing activities
−Removed: Net increase in cash, due from banks and interest-bearing deposits
+Added: Net cash (used in) provided by financing activities
+Added: Net (decrease)/increase in cash, due from banks and interest-bearing deposits
Cash, due from banks and interest-bearing deposits at the beginning of the period
16 unchanged sentences
Basis of Presentation
−Removed: The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank ("Pegasus"), Worthington National Bank ("Worthington") and BancFirst and its subsidiaries.
−Removed: The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc., BFTower, LLC, BFC-PNC LLC, and BancFirst Agency, Inc.
+Added: The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank ("Pegasus"), Worthington Bank ("Worthington") and BancFirst and its subsidiaries ("BancFirst").
+Added: The principal operating subsidiaries of BancFirst are BFTower, LLC, BFC-PNC LLC, and BancFirst Agency, Inc.
All significant intercompany accounts and transactions have been eliminated.
15 unchanged sentences
Recent Accounting Pronouncements
−Removed: Standards Not Yet Adopted:
+Added: Standards Adopted During the Current Period:
In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2022-02, “Financial Instruments –
−Removed: Credit Losses (Topic 326).”
−Removed: ASU 2022-02 eliminates the TDR recognition and measurement guidance and, instead, requires that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan.
−Removed: The Company has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings when adopted.
−Removed: In addition, the update requires that the Company disclose current-period write-offs by year of origination for financing receivables.
−Removed: The current-period write-off amendment should be applied prospectively.
+Added: Credit Losses (Topic 326):
+Added: Troubled Debt Restructurings and Vintage Disclosures.”
+Added: ASU 2022-02 eliminated the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, required that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty.
+Added: In addition, the update required that the Company disclose current-period charge-offs by year of origination for financing receivables.
+Added: The current-period charge-off amendment was applied prospectively.
+Added: The amendments were effective for annual periods beginning after December 15, 2022, including interim periods within those annual periods.
+Added: The Company adopted ASU 2022-02 on January 1, 2023 .
+Added: 2022-02 did no t have a significant impact on the Company’s consolidated financial statements.
+Added: In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
+Added: 2023-02, "Investments - Equity Method and Joint Ventures (Topic 323)." ASU 2023-02 permits the election of accounting for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method, if certain conditions are met.
+Added: Using the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits
+Added: and other income tax benefits in the income statement as a component of income tax expense (benefit).
The amendments are effective for annual periods beginning after December 15, 2023, including interim periods within those annual periods.
−Removed: Early adoption is permitted;
−Removed: however the Company expects to adopt ASU 2022-02 on January 1, 2023.
−Removed: 2022-02 is not expected to have a significant impact on the Company’s consolidated financial statements.
+Added: Early adoption is permitted for all entities in any interim period.
+Added: The Company adopted the amendment as of January 1, 2023 using the modified retrospective transition.
+Added: The Company has investments in New Markets Tax Credits (NMTC) and Low-Income Housing Tax Credits (LIHTC) that will be affected by ASU 2023-02.
+Added: Upon adoption of ASU No.
+Added: 2023-02, the Company recorded $ 21.8 million in other assets and other liabilities on the consolidated balance sheet for unfunded LIHTC commitments and amortized $ 977,000 of NMTC investments to income tax expense during the period that would have previously been recorded to other expense.
+Added: 2023-02 did no t have a significant impact on the Company’s consolidated financial statements.
(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
−Removed: On February 8, 2022, BancFirst Corporation acquired Worthington for an aggregate cash purchase price of $ 77.7 million.
−Removed: Worthington is chartered and regulated by the Office of the Comptroller of the Currency (OCC) with one banking location in Arlington, Texas, one in Colleyville, Texas and two in Fort Worth, Texas.
+Added: On March 30, 2023, the Company took an advance of $ 200.0 million on its line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas, which was paid off on April 3, 2023.
+Added: On February 8, 2022, the Company acquired Worthington for an aggregate cash purchase price of $ 77.7 million.
+Added: Worthington is chartered and regulated by the Texas State Banking Department with one banking location in Arlington, Texas, one in Colleyville, Texas and two in Fort Worth, Texas.
At acquisition, Worthington had approximately $ 478 million in total assets, $ 257 million in loans and $ 430 million in deposits.
−Removed: Worthington will continue to operate under a separate charter and remain a separate subsidiary of BancFirst Corporation governed by its existing board of directors.
−Removed: BancFirst Corporation intends to provide an appropriate amount of capital or other support to increase Worthington’s ability to approve larger loans and allow Worthington to continue to grow earning assets.
−Removed: As a result of the acquisition, the Company recorded a core deposit intangible of approximately $ 5.9 million and goodwill of approximately $ 32.1 million.
+Added: Worthington will continue to operate under a separate charter and remain a separate subsidiary of the Company governed by its existing board of directors.
+Added: The Company intends to provide an appropriate amount of capital or other support to increase Worthington’s ability to approve larger loans and allow Worthington to continue to grow earning assets.
+Added: As a result of the acquisition, the Company recorded a core deposit intangible of $ 5.9 million and goodwill of $ 32.1 million.
+Added: The Company did not incur a material amount of acquisition-related expenses.
The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward.
1 unchanged sentence
The acquisition of Worthington complements the Company by expanding its Texas presence in the Dallas-Fort Worth market.
−Removed: 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.
−Removed: See Note (7) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.
−Removed: On May 20, 2021, the Company purchased approximately $ 284 million in total assets, which included approximately $ 195 million in loans, and assumed approximately $ 256 million in deposits and certain other obligations, from The First National Bank and Trust Company of Vinita, Oklahoma for a purchase price of approximately $ 21 million.
−Removed: The Company recorded a bargain purchase gain related to this purchase of approximately $ 4.8 million, which was included in other noninterest income on the consolidated statement of comprehensive income and in other operating activities on the consolidated statement of cash flow.
−Removed: The bargain purchase gain is a noncash item on the consolidated statement of cash flow.
−Removed: In addition, the Company recorded expenses related to this purchase of approximately $ 4.8 million, which were included in noninterest expense.
−Removed: As a result of the purchase, the Company recorded a core deposit intangible of approximately $ 1.7 million.
−Removed: The effect of this purchase was included in the consolidated financial statement of the Company from the date of purchase forward.
−Removed: The purchase did not have a material effect on the Company’s consolidated financial statements.
−Removed: The First National Bank and Trust Company of Vinita was a nationally chartered bank with two banking locations in Vinita and Grove, Oklahoma.
−Removed: On January 22, 2021, the Company sold approximately $ 21 million in loans and approximately $ 38 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma.
−Removed: The Company recorded a gain on the transaction of $ 2.5 million, which is included in noninterest income in 2021.
(3) SECURITIES
The following table summarizes the amortized cost and estimated fair values of debt securities held for investment:
−Removed: September 30, 2022
+Added: March 31, 2023
(Dollars in thousands)
7 unchanged sentences
The following table summarizes the amortized cost and estimated fair values of debt securities available for sale:
−Removed: September 30, 2022
+Added: March 31, 2023
(Dollars in thousands)
12 unchanged sentences
On January 10, 2022, the Company purchased United States Treasury Notes of $ 600 million par value with an average yield of 1.42 % and an average maturity of 53 months.
−Removed: On August 25, 2022, the Company purchased United States Treasury Notes of $ 300 million par value with an average yield of 3.27 % and an average maturity of 58 months.
The maturities of debt securities held for investment and available for sale are summarized in the following table using contractual maturities.
1 unchanged sentence
For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
14 unchanged sentences
The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
2 unchanged sentences
The following is a detail of proceeds from sales and the realized losses on available for sale debt securities:
−Removed: Nine Months Ended September 30,
+Added: March 31, 2023
+Added: March 31, 2022
(Dollars in thousands)
Gross losses realized
−Removed: In March 2022, the Company sold $ 226 million of debt securities with an average yield of 0.16 %, the proceeds of which were subsequently reinvested in $ 220 million of debt securities with an average yield of 1.86 %.
+Added: There were no sales of debt securities and therefore no proceeds from sales or realized securities gains or losses on available for sale debt securities for the three months ended March 31, 2023.
+Added: During the three months ended March 31, 2022, the Company sold $ 226 million of debt securities with an average yield of 0.16 %, the proceeds of which were subsequently reinvested in $ 220 million of debt securities with an average yield of 1.86 %.
The Company used specific identification to reclassify the unrealized loss in other comprehensive income to a realized loss, as shown in the consolidated statements of comprehensive income.
−Removed: There were no sales of debt securities and therefore no proceeds from sales or realized securities gains or losses on available for sale debt securities for the nine months ended September 30, 2021.
Realized gains/losses on debt and equity securities are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.
−Removed: The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at September 30, 2022 and December 31, 2021 respectively:
+Added: The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at March 31, 2023 and December 31, 2022 respectively:
Less than 12 Months
2 unchanged sentences
(Dollars in thousands)
−Removed: September 30, 2022
+Added: March 31, 2023
Available for Sale
9 unchanged sentences
States and political subdivisions
+Added: Asset backed securities
Other securities
The Company has the ability and intent to hold the debt securities classified as held for investment until they mature, at which time the Company will receive full value for the debt securities.
−Removed: Furthermore, as of September 30, 2022 and December 31, 2021, the Company also had the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost.
+Added: Furthermore, as of March 31, 2023 and December 31, 2022, the Company also had the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost.
The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased.
3 unchanged sentences
(4) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
+Added: Certain loan segments were reclassified during the quarter.
+Added: Each loan segment is made up of loan categories possessing similar risk characteristics.
+Added: The Company’s re-alignment of the segments primarily consisted of reclassifying farmland and agriculture related loans that were previously included in consumer-related and commercial-related loans to the agriculture category.
+Added: Management believes this accurately represents the risk profile of each loan segment.
+Added: The prior period amounts have been revised to conform to the current period presentation.
+Added: These reclassifications did not have a significant impact on the allowance for credit losses.
Loans held for investment are summarized by portfolio segment as follows:
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
6 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate (2)
+Added: Commercial non-real estate
Consumer non-real estate
−Removed: (1) Excludes accrued interest receivable of $ 25.4 million at September 30, 2022 and $ 21.0 million at December 31, 2021, that is recorded in accrued interest receivable and other assets.
−Removed: (2) Includes PPP loans held for investment of $ 1.1 million, net of unamortized processing fees of $ 0 , at September 30, 2022 and $ 80.4 million, net of unamortized processing fees of $ 2.0 million, at December 31, 2021.
−Removed: Loans that were designated as Other and consisted mainly of Small Business Administration (“SBA”) loans were moved to their more descriptive portfolio segment.
−Removed: Therefore, we no longer have an Other loan portfolio segment.
−Removed: In April 2020, the Company began originating loans to qualified small businesses under the Paycheck Protection Program (“PPP”) administered by the SBA.
−Removed: Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans.
−Removed: T he Company had processing fees, which were recognized as interest income related to the PPP loans totaling approximately $ 0 and $ 10.0 million during the three months ended September 30, 2022 and 2021, respectively and $ 2.1 million and $ 31.7 million during the nine months ended September 30, 2022 and 2021, respectively.
+Added: (1) Excludes accrued interest receivable of $ 30.9 million at March 31, 2023 and $ 30.6 million at December 31, 2022, that is recorded in accrued interest receivable and other assets.
The Company's loans are currently 83 % held by BancFirst and 17 % held by Pegasus and Worthington.
5 unchanged sentences
The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: Troubled Debt Restructurings, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets
−Removed: The following is a summary of troubled debt restructurings and other real estate owned and repossessed assets:
−Removed: September 30, 2022
+Added: Loan Modifications, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets
+Added: The following is a summary of other real estate owned and repossessed assets:
+Added: March 31, 2023
December 31, 2022
(Dollars in thousands)
−Removed: Troubled debt restructurings
Other real estate owned and repossessed assets
−Removed: The Company charges interest on principal balances outstanding on troubled debt restructurings during deferral periods.
−Removed: The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material.
−Removed: Other real estate owned included a commercial real estate property recorded at approximately $ 31.2 million at September 30, 2022 and $ 29.5 million at December 31, 2021.
+Added: As of both March 31, 2023 and December 31, 2022, other real estate owned included a commercial real estate property recorded at approximately $ 30.1 million and $ 29.4 million, respectively.
Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income.
1 unchanged sentence
This property had the following rental income and operating expenses for the periods presented.
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: For the Three Months Ended March 31,
(Dollars in thousands)
1 unchanged sentence
Operating expense
−Removed: At December 31, 2021, other real estate owned also included approximately $ 2.4 million related to the Company's previous headquarters.
−Removed: The previous headquarters was sold during the second quarter of 2022.
−Removed: During the nine months ended September 30, 2022, the Company sold property held in other real estate owned for a total gain of $ 4.0 million, compared to a total gain of $ 245,000 in the nine months ended September 30, 2021.
+Added: During the three months ended March 31, 2023, the Company sold property held in other real estate owned for a total gain of $ 98,000 , compared to a total gain of $ 726,000 in the three months ended March 31, 2022.
+Added: The Company charges interest on principal balances outstanding on modified loans during deferral periods.
+Added: The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material.
Nonaccrual loans
−Removed: The Company did no t recognize any interest income on nonaccrual loans for either of the nine months ended September 30, 2022 or 2021.
−Removed: In addition, there were no nonaccrual loans for which there is no related allowance for credit losses at both September 30, 2022 and December 31, 2021.
−Removed: Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 992,000 for the nine months ended September 30, 2022 and approximately $ 1.7 million for the nine months ended September 30, 2021.
−Removed: Nonaccrual loans guaranteed by government agencies totaled approximately $ 2.0 million at September 30, 2022 and approximately $ 3.3 million at December 31, 2021.
+Added: The Company did no t recognize any interest income on nonaccrual loans for either the three months ended March 31, 2023 or 2022.
+Added: In addition, there were no nonaccrual loans for which there is no related allowance for credit losses at both March 31, 2023 and December 31, 2022.
+Added: Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 358,000 for the three months ended March 31, 2023 and approximately $ 376,000 for the three months ended March 31, 2022.
+Added: Nonaccrual loans guaranteed by government agencies totaled approximately $ 6.4 million at March 31, 2023 and approximately $ 4.7 million at December 31, 2022.
The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
6 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
3 unchanged sentences
(Dollars in thousands)
−Removed: As of September 30, 2022
+Added: As of March 31, 2023
Commercial real estate owner occupied
4 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
6 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
6 unchanged sentences
The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.
−Removed: The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades :
+Added: The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades along with the gross charge-offs by year of origination:
Term Loans Amortized Cost Basis by Origination Year
−Removed: Revolving Loans Amortized Cost Basis
+Added: Revolving Loans
(Dollars in thousands)
−Removed: As of September 30, 2022
+Added: Amortized Cost Basis
+Added: As of March 31, 2023
Commercial real estate owner occupied
Total commercial real estate owner occupied
+Added: Current-period gross charge-offs
Commercial real estate non-owner occupied
Total commercial real estate non-owner occupied
+Added: Current-period gross charge-offs
Construction and development < 60 months
Total construction and development < 60 months
+Added: Current-period gross charge-offs
Construction residential real estate < 60 months
2 unchanged sentences
Total residential real estate first lien
+Added: Current-period gross charge-offs
Residential real estate all other
Total residential real estate all other
−Removed: Total farmland
−Removed: Commercial and agricultural non-real estate
−Removed: Total commercial and agricultural non-real estate
+Added: Current-period gross charge-offs
+Added: Total Agriculture
+Added: Current-period gross charge-offs
+Added: Commercial non-real estate
+Added: Total commercial non-real estate
+Added: Current-period gross charge-offs
Consumer non-real estate
Total consumer non-real estate
+Added: Current-period gross charge-offs
Total oil and gas
Total loans held for investment
+Added: Total current-period gross charge-offs
Allowance for Credit Losses Methodology
−Removed: The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model.
+Added: The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the CECL model.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.
−Removed: The increase in allowance for credit losses during 2022 was related to the purchase of loans without credit deterioration during the year along with loan growth.
−Removed: The decrease in the allowance for credit losses during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit losses within the loan portfolio.
−Removed: This reduction during 2021 was partially offset by additional allowance for credit losses required for newly acquired loans.
−Removed: The allowance for credit losses for the oil and gas category was reduced during 2021 due to the increases in oil and gas commodity prices contributing to a more stable and profitable energy industry;
−Removed: however this decrease was offset by an increase in allowance for credit losses for the commercial real estate non-owner occupied category due to ongoing uncertainty regarding the pandemic's long-term impact on the office and retail sectors.
The following table details activity in the allowance for credit losses on loans for the period presented.
1 unchanged sentence
Allowance for Credit Losses
−Removed: Initial allowance on loans purchased with credit deterioration
Provision for /(benefit from) credit losses on loans
(Dollars in thousands)
−Removed: Three Months Ended September 30, 2022
−Removed: Commercial real estate owner occupied
−Removed: Commercial real estate non-owner occupied
−Removed: Construction and development < 60 months
−Removed: Construction residential real estate < 60 months
−Removed: Residential real estate first lien
−Removed: Residential real estate all other
−Removed: Commercial and agricultural non-real estate
−Removed: Consumer non-real estate
−Removed: Nine Months Ended September 30, 2022
+Added: Three Months Ended March 31, 2023
Commercial real estate owner occupied
4 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
3 unchanged sentences
(Dollars in thousands)
−Removed: Three Months Ended September 30, 2021
−Removed: Commercial real estate owner occupied
−Removed: Commercial real estate non-owner occupied
−Removed: Construction and development < 60 months
−Removed: Construction residential real estate < 60 months
−Removed: Residential real estate first lien
−Removed: Residential real estate all other
−Removed: Commercial and agricultural non-real estate
−Removed: Consumer non-real estate
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Commercial real estate owner occupied
4 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
1 unchanged sentence
The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination.
−Removed: The credit-deteriorated loans purchased during the nine-month periods ended September 30, 2022 and September 30, 2021 were as follows:
+Added: The Company did not purchase credit-deteriorated loans during the three month period ended March 31, 2023.
+Added: The credit-deteriorated loans purchased during the three months ended March 31, 2022 were as follows:
Loans acquired
2 unchanged sentences
(Dollars in thousands)
−Removed: For the period ended September 30, 2022
−Removed: Purchase price of loans at acquisition
−Removed: Allowance for credit losses at acquisition
−Removed: Par value of acquired loans at acquisition
−Removed: For the period ended September 30, 2021
+Added: For the period ended March 31, 2022
Purchase price of loans at acquisition
3 unchanged sentences
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral.
−Removed: During the nine months ended September 30, 2022 and 2021 , no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.
+Added: During the three months ended March 31, 2023 and 2022 , no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.
The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:
4 unchanged sentences
(Dollars in thousands)
−Removed: As of September 30, 2022
+Added: As of March 31, 2023
Commercial real estate owner occupied
4 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
12 unchanged sentences
Residential real estate all other
−Removed: Commercial and agricultural non-real estate
+Added: Commercial non-real estate
Consumer non-real estate
1 unchanged sentence
Non-Cash Transfers from Loans and Premises and Equipment
−Removed: Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow.
+Added: Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the consolidated statements of cash flow.
Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Dollars in thousands)
2 unchanged sentences
(5) INTANGIBLE ASSETS AND GOODWILL
−Removed: The following is a summary of intangible assets as of the dates listed:
+Added: The following is a summary of intangible assets as of the date listed:
(Dollars in thousands)
−Removed: September 30, 2022
+Added: March 31, 2023
Core deposit intangibles
4 unchanged sentences
The following is a summary of goodwill by business segment:
−Removed: Metropolitan Banks
−Removed: Community Banks
+Added: BancFirst Metropolitan Banks
+Added: BancFirst Community Banks
Other Financial Services
1 unchanged sentence
(Dollars in thousands)
−Removed: Nine months ended September 30, 2022
−Removed: Balance at beginning of period
−Removed: Balance at end of period
−Removed: The Company acquired Worthington on February 8, 2022, which added core deposit intangibles and goodwill shown in the tables above.
−Removed: See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
+Added: Three months ended March 31, 2023
+Added: Balance at beginning and end of period
Additional information for intangible assets can be found in Note (7) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 .
−Removed: The Company has operating leases, which primarily consist of office space in buildings, ATM locations, storage facilities, parking lots, equipment and land on which it owns certain buildings.
−Removed: The following table presents rent expense for all operating leases, including those rented on a monthly or temporary basis as of the periods indicated:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: (Dollars in thousands)
−Removed: Rental expense
−Removed: As of September 30, 2022 , the right of use lease asset included in accrued interest receivable and other assets on the consolidated balance sheet totaled $ 6.0 million, and a related lease liability included in accrued interest payable and other liabilities on the consolidated balance sheet totaled $ 5.8 million.
−Removed: As of September 30, 2022 , the Company's operating leases have a weighted-average remaining lease term of 3.6 years and a weighted-average discount rate of 2.4 percent.
−Removed: The following table presents minimum future commitments by year for the Company’s operating leases.
−Removed: Such commitments are reflected as undiscounted values and are reconciled to the discounted present value recognized on the consolidated balance sheet.
−Removed: September 30, 2022
−Removed: (Dollars in thousands)
−Removed: 2022 (three months)
−Removed: Total lease payments
−Removed: Less imputed Interest
−Removed: Operating lease liability
−Removed: The Company is a lessor of operating leases, which primarily consist of office space in buildings and parking lots.
−Removed: These assets are classified on the consolidated balance sheet as premises and equipment.
−Removed: The Company had operating lease revenue of $ 1.3 million and $ 1.1 million for the three months ended September 30, 2022 and September 30, 2021, respectively.
−Removed: The Company had operating lease revenue of $ 4.0 million and $ 3.7 million for the nine months ended September 30, 2022 and September 30, 2021, respectively.
−Removed: Lease revenue is included in occupancy, net on the consolidated statement of comprehensive income.
−Removed: The Company does not have operating leases that extend beyond 2031.
−Removed: The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:
−Removed: September 30, 2022
−Removed: (Dollars in thousands)
−Removed: 2022 (three months)
−Removed: Total future minimum lease payments
(6) SUBORDINATED DEBT
7 unchanged sentences
The stated maturity date of the $ 26.8 million of 7.20 % Junior Subordinated Debentures is March 31, 2034 , but they are subject to mandatory redemption pursuant to optional prepayment terms.
−Removed: The Cumulative Trust Preferred Securities represent an undivided interest in the $ 26.8 million of 7.20 % Junior Subordinated Debentures and are guaranteed by the Company.
+Added: The Cumulative Trust Preferred Securities
+Added: represent an undivided interest in the $ 26.8 million of 7.20 % Junior Subordinated Debentures and are guaranteed by the Company.
During any deferral period or during any event of default, the Company may not declare or pay any dividends on any of its capital stock.
5 unchanged sentences
The Company used the proceeds from the sale of the Subordinated Notes for general corporate purposes.
−Removed: The Subordinated Notes will initially bear interest at a fixed rate of 3.50 % per annum, from and including June 17,
−Removed: 2021 to but excluding June 30, 2031, payable semi-annually in arrears on June 30 and December 31 of each year , commencing December 31, 2021 .
+Added: The Subordinated Notes will initially bear interest at a fixed rate of 3.50 % per annum, from and including June 17, 2021 to but excluding June 30, 2031, payable semi-annually in arrears on June 30 and December 31 of each year , commencing December 31, 2021 .
Then, from and including June 30, 2031, to but excluding the maturity date, the Subordinated Notes will bear interest at a floating rate equal to the benchmark (initially, three-month term SOFR), reset quarterly, plus a spread of 229 basis points, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year.
9 unchanged sentences
The Company has had a nonqualified incentive stock option plan, the BancFirst Corporation Stock Option Plan (the “Employee Plan”), since May 1986.
−Removed: At September 30, 2022 , there were 82,500 shares available for future grants.
+Added: At March 31, 2023 , there were 42,500 shares available for future grants.
The Employee Plan will terminate on December 31, 2024 , if not extended.
6 unchanged sentences
Each non-employee director is granted an option for 10,000 shares.
−Removed: At September 30, 2022 , there were 45,000 shares available for future grants.
+Added: At March 31, 2023 , there were 45,000 shares available for future grants.
The Non-Employee Directors’
4 unchanged sentences
Although not required or expected, the Company may settle some options in cash on a limited basis at the discretion of the Company.
−Removed: During the nine months ended September 30, 2021, the Company had cash settlements for 121,330 shares for a total net cash settlement of options of $ 5.5 million that did not increase the outstanding shares of the Company.
+Added: The Company had no cash settlements during the three months ended March 31, 2023 or March 31, 2022.
The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’
(Dollars in thousands, except option data)
−Removed: Nine Months Ended September 30, 2022
+Added: Three Months Ended March 31, 2023
Outstanding at December 31, 2022
−Removed: Options granted
Options exercised
Options canceled, forfeited, or expired
−Removed: Outstanding at September 30, 2022
−Removed: Exercisable at September 30, 2022
+Added: Outstanding at March 31, 2023
+Added: Exercisable at March 31, 2023
The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
(Dollars in thousands)
−Removed: (Dollars in thousands)
Total intrinsic value of options exercised
5 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
(Dollars in thousands)
−Removed: (Dollars in thousands)
Stock-based compensation expense
2 unchanged sentences
The following table shows the unearned stock-based compensation expense:
−Removed: September 30, 2022
+Added: March 31, 2023
(Dollars in thousands)
Unearned stock-based compensation expense
+Added: No stock options were granted during the three months ended March 31, 2023.
The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended
Weighted average grant-date fair value per share of options granted
1 unchanged sentence
1.75 to 2.14 %
−Removed: 1.30 to 1.74 %
Dividend yield
1 unchanged sentence
34.61 to 34.69 %
−Removed: 35.55 to 36.27 %
Expected term
7 unchanged sentences
Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999.
−Removed: As of September 30, 2022 , there are 28,130 shares available for future issuance under the Deferred Stock Compensation Plan.
+Added: As of March 31, 2023 , there are 24,435 shares available for future issuance under the Deferred Stock Compensation Plan.
The Deferred Stock Compensation Plan will terminate on December 31, 2024 , if not extended.
1 unchanged sentence
They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member.
−Removed: Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account.
−Removed: There were 16,684 and 2,161 shares of common stock distributed from the Deferred Stock Compensation Plan during the nine months ended September 30, 2022 and 2021, respectively.
+Added: Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of
+Added: stock units accumulated in his or her account.
+Added: There were 17,392 and 6,177 shares of common stock distributed from the Deferred Stock Compensation Plan during the three months ended March 31, 2023 and 2022, respectively.
A summary of the accumulated stock units is as follows:
−Removed: September 30,
Accumulated stock units
6 unchanged sentences
The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee.
−Removed: During September 2021, the SRP was amended to permit the repurchase of an additional 650,000 shares.
The following table is a summary of the shares under the program:
−Removed: Nine Months Ended
−Removed: September 30,
−Removed: Number of shares repurchased
−Removed: Average price of shares repurchased
+Added: Three Months Ended
Shares remaining to be repurchased
2 unchanged sentences
Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s consolidated financial statements.
−Removed: The Company believes that as of September 30, 2022 , BancFirst Corporation, BancFirst, Pegasus and Worthington met all capital adequacy requirements to which they are subject.
+Added: The Company believes that as of March 31, 2023 , BancFirst Corporation, BancFirst, Pegasus and Worthington met all capital adequacy requirements to which they are subject.
The actual and required capital amounts and ratios are shown in the following table:
4 unchanged sentences
(Dollars in thousands)
−Removed: As of September 30, 2022:
+Added: As of March 31, 2023:
Total Capital
10 unchanged sentences
BancFirst Corporation
−Removed: As of September 30, 2022 , the most recent notifications from the Federal Reserve Bank of Kansas City, the FDIC and the Comptroller of the Currency, categorized BancFirst, Pegasus and Worthington as “well capitalized”
+Added: As of March 31, 2023 , the most recent notifications from the Federal Reserve Bank of Kansas City, the FDIC and the Comptroller of the Currency, categorized BancFirst, Pegasus and Worthington as “well capitalized”
under the prompt corrective action provisions.
6 unchanged sentences
The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines.
−Removed: In April 2020, the Company began originating loans to qualified small businesses under the PPP administered by the SBA.
−Removed: Federal bank regulatory agencies have issued an interim final rule that permits banks to neutralize the regulatory capital effects of participating in the Paycheck Protection Program Lending Facility (the “PPP Facility”) and clarify that PPP loans have a zero percent risk weight under applicable risk-based capital rules.
−Removed: Specifically, a bank may exclude all PPP loans pledged as collateral to the PPP Facility from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility are included.
−Removed: The PPP loans the Company originated in 2021 and 2020 are included in the calculation of the Company’s leverage ratio as of September 30, 2022 as the Company did not utilize the PPP Facility for funding purposes.
(9) NET INCOME PER COMMON SHARE
2 unchanged sentences
(Dollars in thousands, except per share data)
−Removed: Three Months Ended September 30, 2022
−Removed: Income available to common stockholders
−Removed: Dilutive effect of stock options
−Removed: Income available to common stockholders plus assumed exercises of stock options
−Removed: Three Months Ended September 30, 2021
−Removed: Income available to common stockholders
−Removed: Dilutive effect of stock options
−Removed: Income available to common stockholders plus assumed exercises of stock options
−Removed: Nine Months Ended September 30, 2022
+Added: Three Months Ended March 31, 2023
Income available to common stockholders
1 unchanged sentence
Income available to common stockholders plus assumed exercises of stock options
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Income available to common stockholders
2 unchanged sentences
The following table shows the number of options that were excluded from the computation of diluted net income per common share for each period because the options were anti-dilutive for the period:
−Removed: Three Months Ended September 30, 2022
−Removed: Three Months Ended September 30, 2021
−Removed: Nine Months Ended September 30, 2022
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2023
+Added: Three Months Ended March 31, 2022
(10) FAIR VALUE MEASUREMENTS
31 unchanged sentences
The Company obtains dealer and market quotations to value its oil and gas swaps and options.
−Removed: The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation model.
+Added: The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation models.
The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of the periods presented, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:
4 unchanged sentences
(Dollars in thousands)
−Removed: September 30, 2022
+Added: March 31, 2023
Debt securities available for sale:
16 unchanged sentences
The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Twelve Months Ended
2 unchanged sentences
Transfers to level 2
−Removed: Total unrealized losses
+Added: Total unrealized gain
Balance at the end of the period
The Company’s policy is to recognize transfers in and transfers out of Levels 1, 2 and 3 as of the end of the reporting period.
−Removed: During the nine months ended September 30, 2022, the Company did not transfer any debt securities.
−Removed: During the year ended
−Removed: December 31, 2021, the Company transferred debt securities from Level 3 to Level 2 due to a review of the pricing models that determined some asset backed debt securities to be Level 2.
+Added: During the three months ended March 31, 2023, the Company did not transfer any debt securities.
+Added: In addition, during the year ended December 31, 2022, the Company did not transfer any debt securities.
Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis
15 unchanged sentences
(Dollars in thousands)
−Removed: As of and for the Year-to-date Period Ended September 30, 2022
+Added: As of and for the Year-to-date Period Ended March 31, 2023
Equity securities
40 unchanged sentences
The estimated fair values of the Company’s financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value, are as follows:
−Removed: September 30,
(Dollars in thousands)
19 unchanged sentences
These items are evaluated at least annually for impairment.
−Removed: The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at September 30, 2022 or December 31, 2021 .
+Added: The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at March 31, 2023 or December 31, 2022 .
(11) DERIVATIVE FINANCIAL INSTRUMENTS
3 unchanged sentences
The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices.
−Removed: These margins have increased during 2022 due to the current increase in oil and gas prices and customer activity.
−Removed: These margins are included in other assets totaling $ 24.7 million at September 30, 2022 and $ 14.3 million at December 31, 2021.
+Added: At March 31, 2023 , the Company had a margin liability included in other liabilities in the amount of $ 4.6 million.
+Added: At December 31, 2022 , the Company had a margin asset included in other assets in the amount of $ 6.6 million.
The Company utilizes dealer quotations and observable market data inputs to substantiate internal valuation models.
The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table:
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
−Removed: Oil and Gas Swaps and Options
+Added: Oil and Natural Gas Swaps and Options
Notional Units
12 unchanged sentences
The following table is a summary of the Company's recognized income related to the activity, which was included in other noninterest income:
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended September 30,
−Removed: (Dollars in thousands)
+Added: Three Months Ended March 31,
(Dollars in thousands)
Derivative income
−Removed: The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and gas.
+Added: The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas.
Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions.
3 unchanged sentences
Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor's) and monitoring market information.
−Removed: The Company's net credit exposure relating to oil and gas swaps and options with bank counterparties was $ 5.1 million at September 30, 2022 and $ 0 at December 31, 2021.
+Added: The following table is a summary of the Company's net credit exposure relating to oil and gas swaps and options with bank counterparties:
+Added: March 31, 2023
+Added: December 31, 2022
+Added: (Dollars in thousands)
+Added: Credit exposure
Balance Sheet Offsetting
1 unchanged sentence
The Company's derivative transactions with upstream financial institution counterparties and bank customers are generally executed under International Swaps and Derivative Association ("ISDA") master agreements, which include "right of set-off" provisions.
−Removed: In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis.
+Added: In such cases
+Added: there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis.
Nonetheless, the Company does not generally offset such financial instruments for financial reporting purposes.
1 unchanged sentence
The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis.
−Removed: The six principal business units are metropolitan banks, community banks, Pegasus, Worthington, other financial services and executive, operations and support.
−Removed: Metropolitan banks, community banks, Pegasus and Worthington offer traditional banking products such as commercial and retail lending and a full line of deposit accounts.
−Removed: Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas.
−Removed: Community banks consist of banking locations in communities throughout Oklahoma.
+Added: The six principal business units are BancFirst metropolitan banks, BancFirst community banks, Pegasus, Worthington, other financial services and executive, operations and support.
+Added: BancFirst metropolitan banks, BancFirst community banks, Pegasus and Worthington offer traditional banking products such as commercial and retail lending and a full line of deposit accounts.
+Added: BancFirst metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas.
+Added: BancFirst community banks consist of banking locations in communities in Oklahoma outside the Oklahoma City and Tulsa metropolitan areas.
Pegasus consists of banking locations in the Dallas metropolitan area.
−Removed: Worthington consists of banking locations in the Fort Worth metropolitan area.
+Added: Worthington consists of banking locations in the Dallas and Fort Worth metropolitan areas.
Other financial services are specialty product business units including guaranteed small business lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance.
1 unchanged sentence
The results of operations and selected financial information for the six business units are as follows:
+Added: BancFirst Metropolitan
+Added: BancFirst Community
(Dollars in thousands)
−Removed: Three Months Ended September 30, 2022
−Removed: Net interest income
−Removed: Noninterest income
−Removed: Income before taxes
−Removed: Three Months Ended September 30, 2021
−Removed: Net interest income
−Removed: Noninterest income
−Removed: Income before taxes
−Removed: Nine Months Ended September 30, 2022
+Added: Three Months Ended March 31, 2023
Net interest income
1 unchanged sentence
Income before taxes
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Net interest income
2 unchanged sentences
Total Assets:
−Removed: September 30, 2022
+Added: March 31, 2023
December 31, 2022
4 unchanged sentences
Management’s Discussio n and Analysis of Financial Condition and Results of Operations.
−Removed: The following discussion and analysis of our financial condition as of September 30, 2022 and December 31, 2021 and results of operations for the three and nine months ended September 30, 2022 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2021, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
+Added: The following discussion and analysis of our financial condition as of March 31, 2023 and December 31, 2022 and results of operations for the three months ended March 31, 2023 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2022, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the 2022 Form 10-K, and "Item 1A, Risk Factors" in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis.
15 unchanged sentences
Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
−Removed: The Durbin Amendment will impact noninterest income beginning July 1, 2023.
+Added: The impact of the Durbin Amendment on noninterest income beginning July 1, 2023.
+Added: Potential impacts of the recent adverse developments in the banking industry driven by high-profile bank failures, including impacts on customer confidence, demand deposit outflows and the regulatory response thereto .
+Added: Recent deterioration in the market for commercial office property could have an adverse effect on the value of the Company's other real estate owned as well as the collateral for the Company's commercial real estate loans.
Political pressures could further limit our ability to charge for NSF and overdraft fees.
Rising interest rates.
−Removed: The increased Securities and Exchange Commission's requirements related to environmental, social and governance (ESG) issues, as well as climate disclosures will increase noninterest expense.
−Removed: The lingering effect of governments’
−Removed: stimulus programs.
+Added: The increased time, effort and non-interest expense related to ongoing and increased regulations from the Federal Reserve, Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau and the Securities and Exchange Commission (requirements related to environmental, social and governance (ESG) issues and climate disclosure).
Local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact.
1 unchanged sentence
Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations.
−Removed: The effect of changes in laws and regulations such as those from the Consumer Financial Protection Bureau, Federal Reserve, and the Federal Deposit Insurance Corporation (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company must comply.
−Removed: The COVID-19 pandemic’s lingering effects on us and our customers, employees and third-party service providers, which may materially affect our business, financial position, operations and prospects.
Impairment of the Company’s goodwill or other intangible assets.
2 unchanged sentences
Technological changes.
−Removed: Acquisitions and integration of acquired businesses.
The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
1 unchanged sentence
Actual results may differ materially from forward-looking statements.
−Removed: The Company’s net income for the third quarter of 2022 was $55.4 million, compared to $38.8 million for the third quarter of 2021.
−Removed: Diluted net income per common share was $1.65 and $1.16 for the third quarter of 2022 and 2021, respectively.
−Removed: The Company’s net interest income for the third quarter of 2022 increased to $100.9 million, compared to $80.2 million for the third quarter of 2021.
−Removed: Rising interest rates and loan growth contributed to the increase.
−Removed: The net interest margin for the third quarter was 3.48%, and for the third quarter of 2021 was 3.09%.
−Removed: Net interest income for the third quarter of 2021 included $10.0 million in Paycheck Protection Program (“PPP”) fees.
−Removed: For the third quarter of 2022 the Company recorded a provision for credit losses of $2.9 million compared to $1.5 million for the third quarter of 2021.
−Removed: The Company's view of the likelihood of a significant economic downturn in Oklahoma and Texas remains neutral and therefore expects it will maintain its current level of comparable expected credit losses for the near term.
−Removed: Noninterest income for the third quarter of 2022 totaled $49.3 million, up from $39.8 million for the third quarter of 2021.
−Removed: The increase in noninterest income in 2022 was mostly attributable to $3.4 million in sweep fees and $3.2 million of income from an equity interest received through restructuring a loan.
−Removed: Noninterest expense for the third quarter of 2022 was $79.1 million, up from $70.2 million for the third quarter of last year, primarily due to increases associated with the Worthington acquisition and salary increases.
−Removed: The Company’s effective tax rate was 19.0% for the third quarter of 2022 compared to 19.7% for the third quarter of 2021.
−Removed: At September 30, 2022, the Company’s total assets were $12.5 billion compared to $9.4 billion at December 31, 2021.
−Removed: Deposits totaled $11.1 billion, an increase of $3.0 billion from December 31, 2021.
−Removed: The consolidated balance sheet growth was driven by the return of customer deposits from off-balance sheet sweep accounts and the acquisition of Worthington National Bank.
−Removed: Loans totaled $6.8 billion compared to $6.2 billion at December 31, 2021.
−Removed: Loan growth during 2022, net of acquired loans and PPP loan runoffs, was $461 million, or 7%.
+Added: The Company’s net income for the first quarter of 2023 was $57.5 million, compared to $35.9 million for the first quarter of 2022.
+Added: Diluted net income per common share was $1.72 and $1.08 for the first quarter of 2023 and 2022, respectively.
+Added: The Company’s net interest income for the first quarter of 2023 increased to $109.2 million, compared to $75.5 million for the first quarter of 2022.
+Added: Rising short-term interest rates and loan growth drove the increase.
+Added: The net interest margin for the first quarter was 3.89%, compared to 2.78% a year ago.
+Added: For the first quarter of 2023, the Company recorded a provision for credit losses of $2.3 million, compared to a provision for credit losses of $2.9 million for the first quarter of 2022.
+Added: Noninterest income for the first quarter of 2023 totaled $47.8 million, compared to $43.7 million for the first quarter of 2022.
+Added: The increase in noninterest income was mostly attributable to an increase in sweep account fees due to rising interest rates and higher volume, along with a $1.3 million increase in insurance commissions.
+Added: Noninterest income for the first quarter of 2023 included $327,000 of income from an equity interest received from a prior loan settlement compared to $4.9 million of income from the same source in the first quarter of 2022.
+Added: In addition, the first quarter of 2022 included a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
+Added: Noninterest expense for the first quarter of 2023 increased to $80.3 million compared to $72.5 million for the first quarter of 2022.
+Added: The increase in noninterest expense was primarily related to an increase in salaries and employee benefits of approximately $5.3 million.
+Added: The first quarter of 2022 included a gain on sale of OREO which reduced noninterest expense by $726,000.
+Added: The Company’s effective tax rate was 22.6% for the first quarter of 2023 compared to 17.8% for the first quarter of 2022.
+Added: During the quarter, the Company adopted Accounting Standard Update ("ASU") 2023-02 and amortized $977,000 of New Market Tax Credits ("NMTC") to income tax expense during the period that would have previously been recorded to other expense.
+Added: Exercises of stock options and a lower state tax rate contributed to the lower effective tax rate in 2022.
+Added: At March 31, 2023, the Company’s total assets were $12.3 billion, a decrease of $55.8 million from December 31, 2022.
+Added: Debt securities of $1.6 billion were up $77.6 million from December 31, 2022.
+Added: Loans totaled $7.1 billion, an increase of $175.0 million from December 31, 2022.
+Added: Deposits totaled $10.6 billion, a decrease of $364.1 million from December 31, 2022 as demand deposits moved into the Company's off balance sheet sweep product.
+Added: Sweep accounts totaled $4.1 billion at March 31, 2023 up $394.9 million from December 31, 2022.
The Company’s total stockholders’
−Removed: equity was $1.2 billion, an increase of $23.4 million over December 31, 2021.
−Removed: Asset quality remained strong as nonaccrual loans continued to decline, totaling $12.0 million, which represented 0.18% of total loans at September 30, 2022, down from 0.34% at year-end 2021.
−Removed: The allowance for credit losses to total loans was 1.32% at September 30, 2022, down slightly from 1.36% at the end of 2021.
+Added: equity at March 31, 2023 was $1.3 billion, an increase of $60.0 million over December 31, 2022.
+Added: At March 31, 2023, the Company’s nonaccrual loans were $17.6 million compared to $15.3 million at year-end 2022.
+Added: Nonaccrual loans represented 0.25% of total loans at March 31, 2023, compared to 0.22% at December 31, 2022.
+Added: The allowance for credit losses to total loans was 1.33% at both March 31, 2023 and December 31, 2022.
+Added: Net charge-offs were minimal for both the first quarter of 2023 and 2022.
See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
−Removed: See Note (1) of the Notes to the Consolidated Financial Statements for changes in the Company’s disclosures regarding recently issued accounting pronouncements since December 31, 2021, the date of its most recent annual report to stockholders.
+Added: See Note (1) of the Notes to the Consolidated Financial Statements for disclosures regarding recently issued accounting pronouncements since December 31, 2022, the date of its most recent annual report to stockholders.
SEGMENT INFORMATION
2 unchanged sentences
Average Balances, Income, Expenses and Rates
−Removed: The following tables present, for the periods indicated, certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities.
+Added: The following table presents, for the periods indicated, certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities.
Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities.
For these computations:
−Removed: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.
−Removed: Loan fees included in interest income were $5.7 million for the three months ended September 30, 2022 compared to approximately $14.4 million for the three months ended September 30,
−Removed: Loan fees included in interest income were $19.4 million for the nine months ended September 30, 2022 compared to $45.8 million for the nine months ended September 30, 2021.
−Removed: BANCFIRST CORPORATION
−Removed: CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
−Removed: Taxable Equivalent Basis
−Removed: (Dollars in thousands)
−Removed: Three Months Ended September 30,
−Removed: Earning assets:
−Removed: Debt securities –
−Removed: Debt securities –
−Removed: Federal funds sold and interest-bearing deposits with banks
−Removed: Total earning assets
−Removed: Nonearning assets:
−Removed: Cash and due from banks
−Removed: Interest receivable and other assets
−Removed: Allowance for credit losses
−Removed: Total nonearning assets
−Removed: LIABILITIES AND STOCKHOLDERS’
−Removed: Interest-bearing liabilities:
−Removed: Transaction deposits
−Removed: Savings deposits
−Removed: Time deposits
−Removed: Short-term borrowings
−Removed: Subordinated debt
−Removed: Total interest-bearing liabilities
−Removed: Interest-free funds:
−Removed: Noninterest-bearing deposits
−Removed: Interest payable and other liabilities
−Removed: Stockholders’
−Removed: Total interest free funds
−Removed: Total liabilities and stockholders’
−Removed: Net interest income
−Removed: Net interest spread
−Removed: Effect of interest free funds
−Removed: Net interest margin
+Added: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan
+Added: balances and any interest on such nonaccrual loans is recognized on a cash basis.
+Added: Loan fees included in interest income were $5.6 million for the three months ended March 31, 2023 compared to $7.3 million for the three months ended March 31, 2022.
BANCFIRST CORPORATION
2 unchanged sentences
(Dollars in thousands)
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Earning assets:
31 unchanged sentences
Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
Income Statement Data
Net interest income
−Removed: Provision for (benefit from) credit losses
+Added: Provision for credit losses
Securities transactions
15 unchanged sentences
Net Interest Income
−Removed: For the three months ended September 30, 2022, net interest income, which is the Company’s principal source of operating revenue, increased $20.8 million or 25.9% compared to the three months ended September 30, 2021.
−Removed: Rising interest rates and loan growth contributed to the increase.
+Added: For the three months ended March 31, 2023, net interest income, which is the Company’s principal source of operating revenue, increased $33.6 million or 44.6% compared to the three months ended March 31, 2022.
+Added: The increase was due to rising short-term interest rates and loan growth.
Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period.
−Removed: As shown in the preceding table, the Company’s net interest margin for the third quarter of 2022 increased compared to the third quarter of 2021.
−Removed: The margin for the third quarter of 2021 included $10.0 million in PPP fees.
−Removed: Net interest income for the nine months ended September 30, 2022 increased $23.6 million or 9.8% compared to the nine months ended September 30, 2021.
−Removed: Rising interest rates contributed to the increase along with net interest income related to the Worthington acquisition.
−Removed: As shown in the preceding table, the Company’s net interest margin for the nine months ended September 30, 2022 decreased compared to the nine months ended September 30, 2021.
−Removed: The margin for the nine months ended September 30, 2021 was positively impacted by higher PPP fees, which were $31.7 million compared to approximately $2.1 million for the nine months ended September 30, 2022.
−Removed: During 2021, the Company’s net interest income and net interest margin were impacted by the decreases in interest rates stemming from the Federal Reserve's response to the COVID-19 pandemic.
−Removed: However, during 2022 the Federal Reserve began raising interest rates and the Company's expectation is that interest rates will continue to increase during the year.
+Added: As shown in the preceding table, the Company’s net interest margin for the first quarter of 2023 increased compared to the first quarter of 2022.
+Added: During 2022, the Federal Reserve began raising interest rates to help slow inflation in the economy.
+Added: The Company’s net interest income and net interest margin were impacted by the increases in interest rates.
+Added: Our expectation is that interest rates will continue to increase in the near term.
Provision for Credit Losses
−Removed: For the third quarter of 2022 the Company recorded a provision for credit losses of $2.9 million compared to $1.5 million for the quarter ended September 30, 2021.
−Removed: Provisions for credit losses have stabilized in 2022 after the economic downturn and recovery from the effects of the COVID pandemic in prior years.
−Removed: The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the consolidated balance sheet date.
+Added: The provision for credit losses is presented in the preceding table.
+Added: The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the balance sheet date.
Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio.
Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change, which could affect the amount of future provisions for credit losses.
−Removed: Net loan charge-offs were $80,000 for the third quarter of 2022, compared to net loan charge-offs of $10,000 for the third quarter of 2021.
−Removed: The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at an unsustainable low level.
−Removed: For the nine months ended September 30, 2022, the Company recorded a provision for credit losses of $6.3 million, which was related to acquired loans and loan growth, compared to a net benefit from reversal of provisions of $8.5 million for the nine months ended September 30, 2021.
−Removed: Net loan charge-offs were $436,000, compared to $4.7 million for the same period of the prior year.
+Added: Net loan charge-offs were $290,000 for the first quarter of 2023, compared to net loan recoveries of $289,000 for the first quarter of 2022.
+Added: The rate of net charge-offs to average total loans, as presented in the preceding table, continues to be at a low level.
Noninterest Income
−Removed: Noninterest income, as presented in the preceding table, increased by $9.5 million for the third quarter of 2022 compared to the third quarter of 2021.
−Removed: The increase in noninterest income in 2022 was mostly attributable to $3.4 million in sweep fees and $3.2 million of income from an equity interest received through restructuring a loan.
−Removed: The Company earned $969,000 on the sale of loans for the third quarter of 2022 compared to $1.6 million for the third quarter of 2021.
−Removed: The income from sales of loans was higher in 2021 due to the increased volume of mortgage loans originated because of record low mortgage rates.
−Removed: The Company expects the volume of mortgage loans originated to decrease as mortgage interest rates increase.
−Removed: Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $6.7 million and $6.8 million for the three months ended September 30, 2022 and 2021, respectively.
−Removed: This represents 13.6% and 17.2% of the Company’s noninterest income for the respective periods.
−Removed: In addition, the Company had debit card interchange fees totaling $12.6 million and $11.7 million during the three months ended September 30, 2022 and 2021, respectively.
−Removed: This represents 25.5% and 29.5% of the Company’s noninterest income for the respective periods.
−Removed: Noninterest income increased by $11.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.
−Removed: The increase in noninterest income was attributable to $8.8 million of income from an equity interest received through restructuring a loan, along with $5.1 million in sweep fees, a $3.8 million increase in income from service charges on deposits and increases in trust revenue and insurance commissions.
−Removed: The increase in non-interest income was partially offset by a loss of $4.0 million on bonds resulting from the sale of $226 million of low yielding debt securities, which were subsequently reinvested in higher yielding debt securities.
−Removed: There was a $216,000 gain on sale of other assets in the first nine months of 2022, compared to $2.7 million for 2021.
−Removed: In addition, there was an acquisition purchase gain of $4.8 million and a gain from the sale of the Company's Hugo, Oklahoma branch of $2.5 million in the first nine months of 2021.
−Removed: The Company earned $3.9 million on the sale of loans for the nine months ended September 30, 2022 compared to $5.7 million for the nine months ended September 30, 2021.
−Removed: Noninterest income included NSF and overdraft fees totaling $19.4 million and $18.0 million during the nine months ended September 30, 2022 and 2021, respectively.
+Added: Noninterest income, as presented in the preceding table, increased by $4.2 million for the first quarter of 2023 compared to the first quarter of 2022.
+Added: The increase in noninterest income was mostly attributable to an increase in sweep account fees due to rising interest rates and higher volume, along with a $1.3 million increase in insurance commissions.
+Added: Noninterest income for the first quarter of 2023 included $327,000 of income from an equity interest received from a prior loan settlement compared to $4.9 million of income
+Added: from the same source in the first quarter of 2022.
+Added: In addition, the first quarter of 2022 included a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
+Added: Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $6.4 million and $6.5 million for the three months ended March 31, 2023 and 2022, respectively.
This represents 13.5% and 15.0% of the Company’s noninterest income for the respective periods.
−Removed: In addition, the Company had debit card interchange fees totaling $36.7 million and $34.3 million during the nine months ended September 30, 2022 and 2021, respectively.
+Added: In addition, the Company had debit card interchange fees totaling $12.0 million and $11.7 million during the three months ended March 31, 2023 and 2022, respectively.
This represents 25.2% and 26.7% of the Company’s noninterest income for the respective periods.
−Removed: An increase in customer accounts and interchange volume activity resulted in higher debit card interchange fees.
−Removed: The Company is subject to political pressures that could limit its ability to charge for NSF and overdraft fees.
+Added: The Company is subject to political pressures that could limit our ability to charge for NSF and overdraft fees.
As of April 1, 2022, the Company lowered the rates charged on NSF and overdraft fees.
−Removed: To the extent that increased volume doesn’t overcome these rate changes, the Company could experience lower annual pretax income.
−Removed: The Company expects to exceed $10 billion in total assets at December 31, 2022.
−Removed: Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this would trigger a reduction of annual pretax income from debit card interchange fees of approximately $22 million beginning July 1, 2023.
+Added: The Company exceeded $10 billion in total assets at December 31, 2022.
+Added: Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this will cause a reduction of annual pretax income from debit card interchange fees of approximately $22 million beginning July 1, 2023.
Noninterest Expense
−Removed: Noninterest expense, as presented in the preceding table, increased by $8.9 million for third quarter of 2022 compared to the third quarter of 2021, primarily due to increases related to the Worthington acquisition and salary increases.
−Removed: For the nine months ended September 30, 2022, noninterest expense increased by $16.1 million compared to the nine months ended September 30, 2021.
−Removed: The increase in noninterest expenses was due to the increase in salaries and employee benefits and other
−Removed: expenses related to the Worthington acquisition.
−Removed: In addition, the nine months ended September 30, 2022 included a gain of $3.1 million from the sale of the Company’s prior headquarters that was carried in other real estate owned, as well as a write down of an equity investment of $1.5 million.
−Removed: The nine months ended September 30, 2021 included approximately $4.0 million in acquisition related expenses.
−Removed: The Company’s effective tax rate was 19.0% for the third quarter of 2022, compared to 19.7% for the third quarter of 2021.
−Removed: The lower effective tax rate was driven by the exercising of stock options during the third quarter of 2022 that provided higher tax deductions for compensation and a lower state income tax rate.
−Removed: The Company’s effective tax rate on income before taxes was 18.7% for the first nine months of 2022, compared to 20.8% for the first nine months of 2021.
−Removed: The reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.
+Added: Noninterest expense, as presented in the preceding table, increased by $7.8 million for first quarter of 2023 compared to the first quarter of 2022.
+Added: The increase in noninterest expenses was primarily related to an increase in salaries and employee benefits of $5.3 million.
+Added: The first quarter of 2022 included a gain on sale of OREO which reduced noninterest expense by $726,000.
+Added: The Company’s effective tax rate was 22.6% for the first quarter of 2023, compared to 17.8% for the first quarter of 2022.
+Added: During the quarter, the Company adopted ASU 2023-02 and amortized $977,000 of NMTC to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 1.31%.
+Added: Exercises of stock options and a lower state tax rate contributed to the lower effective tax rate in 2022.
+Added: The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.
FINANCIAL POSITION
2 unchanged sentences
(Dollars in thousands, except per share data)
−Removed: September 30,
−Removed: Consolidated Balance Sheet Data
+Added: Balance Sheet Data
Total loans (net of unearned interest)
12 unchanged sentences
Selected Financial Ratios
−Removed: Consolidated Balance Sheet Ratios:
+Added: Balance Sheet Ratios:
Average loans to deposits (year-to-date)
5 unchanged sentences
Nonaccrual loans (3)
−Removed: Restructured loans
−Removed: Total nonperforming and restructured loans
Other real estate owned and repossessed assets
−Removed: Total nonperforming and restructured assets
Asset Quality Ratios:
Nonaccrual loans to total loans
−Removed: Nonperforming and restructured loans to total loans
−Removed: Nonperforming and restructured assets to total assets
Allowance for credit losses to total loans
−Removed: Allowance for credit losses to nonperforming and restructured loans
Allowance for credit losses to nonaccrual loans
4 unchanged sentences
This measure should not be considered a substitute for operating results determined in accordance with GAAP.
−Removed: (3) Government agencies guarantee approximately $2.0 million of nonaccrual loans at September 30, 2022.
−Removed: Cash and Interest-Bearing Deposits with Banks
−Removed: The aggregate of cash and due from banks and interest-bearing deposits with banks increased by $1.3 billion, or 62.6%, to $3.3 billion, from December 31, 2021 to September 30, 2022.
−Removed: The increase was primarily related to the return of deposits from off-balance sheet sweep accounts related to the Company’s year-end sweep program, which was partially off-set by the purchase of higher yielding bonds described below.
−Removed: At September 30, 2022, total debt securities increased $987.1 million, or 184.7% compared to December 31, 2021.
+Added: (3) Government agencies guarantee approximately $6.4 million of nonaccrual loans at March 31, 2023.
+Added: Cash and Due from Banks, Federal Funds Sold and Interest-Bearing Deposits with Banks
+Added: The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks decreased by $334.3 million or 10.5% to $2.8 billion, from December 31, 2022 to March 31, 2023.
+Added: The decrease was related to demand deposits that were moved into the Company's off-balance sheet sweep product.
+Added: Sweep accounts were $4.1 billion at March 31, 2023, up $394.9 million from December 31, 2022.
+Added: At March 31, 2023, total debt securities increased $77.6 million, or 5.0% compared to December 31, 2022.
The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management.
−Removed: The net unrealized loss on debt securities available for sale, before taxes, was $107.7 million at September 30, 2022, compared to a net unrealized gain of $2.8
−Removed: million at December 31, 2021.
−Removed: These unrealized losses and gains are included in the Company’s stockholders’
−Removed: equity as accumulated other comprehensive income, net of income tax, in the amounts of a loss of $82.2 million at September 30, 2022 and a gain of $2.2 million at December 31, 2021.
−Removed: During the nine months ended September 30, 2022, the Company had a loss of $4.0 million resulting from the sale of $226 million of debt securities with an average yield of 0.16%, which was subsequently reinvested in $220 million of debt securities with an average yield of 1.86%.
−Removed: The Company also made two other purchases of debt securities in 2022.
−Removed: On January 10, 2022, the Company purchased United States Treasury Notes with $600 million par value at an average yield of 1.42% and an average maturity of 53 months.
−Removed: On August 25, 2022, the Company purchased United States Treasury Notes of $300 million par value with an average yield of 3.27% and an average maturity of 58 months.
+Added: The net unrealized loss on debt securities available for sale, before taxes, was $74.5 million at March 31, 2023, compared to a net unrealized loss of $93.7 million at December 31, 2022.
+Added: These unrealized losses are included in the Company’s stockholders’
+Added: equity as accumulated other comprehensive income, net of income tax, in the amounts of a loss of $56.9 million at March 31, 2023 and a loss of $71.6 million at December 31, 2022.
+Added: During the quarter ended March 31, 2023, the Company purchased debt securities as shown in the consolidated statements of cash flow.
+Added: The Company did not have any sales of debt securities during the quarter ended March 31, 2023.
+Added: During the quarter ended March 31, 2022, the Company had a loss of $4.0 million on bonds resulting from the sale of $226 million of debt securities with an average yield of 0.16%, the proceeds of which were subsequently reinvested in $220 million of debt securities with an average yield of 1.86%.
+Added: On January 10, 2022, the Company purchased United States Treasury Notes of $600 million par value with an average yield of 1.42% and an average maturity of 53 months.
See Note (3) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities.
−Removed: At September 30, 2022, total loans increased $638.4 million or 10.3% compared to December 31, 2021.
−Removed: Internal loan growth during the first nine months of 2022, net of acquired loans and PPP loans, was approximately $461 million, or 7%.
−Removed: The acquisition of Worthington also added $257 million of loans.
−Removed: At September 30, 2022, the balance of total PPP loans was $1.1 million, with no unamortized processing fees, compared to $80.4 million, net of unamortized processing fees of $2.0 million at December 31, 2021.
+Added: At March 31, 2023, total loans increased $175.0 million or 2.5% compared to December 31, 2022, as a result of internal loan growth.
+Added: The increase of internal loan growth was 62% from the Company's Oklahoma subsidiary BancFirst and 38% from the Company's Texas subsidiaries Pegasus and Worthington.
See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s loan portfolio segments.
Allowance for Credit Losses
−Removed: The increase in the allowance for credit losses during 2022 was related to the additional allowance for credit losses required for newly acquired loans and loan growth.
−Removed: The decrease in the allowance for credit losses during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit losses within the loan portfolio.
−Removed: This reduction was partially offset by additional allowance for credit losses required for newly acquired loans.
−Removed: Nonperforming and Restructured Assets
−Removed: At September 30, 2022, nonperforming and restructured assets decreased $12.3 million to $56.8 million compared to December 31, 2021.
−Removed: The Company’s level of nonperforming and restructured assets has continued to be relatively low, equating to 0.46% of total assets at September 30, 2022 and 0.73% of total assets at December 31, 2021.
−Removed: Nonaccrual loans totaled $12.0 million at September 30, 2022, compared to $20.9 million at December 31, 2021.
−Removed: The Company’s nonaccrual loans decreased $8.9 million from December 31, 2021 due to resolutions of several loans.
−Removed: The Company’s nonaccrual loans are primarily commercial and agricultural non-real estate and farmland.
+Added: The allowance for credit losses to total loans was 1.33% at both March 31, 2023 and December 31, 2022.
+Added: The overall credit quality of the Company's loan portfolio has remained strong.
+Added: If unforeseen adverse changes occur in the national or local economy, or in the credit markets, it would be reasonable to expect that the allowance for credit losses would increase in future periods.
+Added: Nonaccrual Loans
+Added: Nonaccrual loans totaled $17.6 million at March 31, 2023, compared to $15.3 million at December 31, 2022.
+Added: The Company’s nonaccrual loans are primarily commercial real estate and commercial non-real estate loans.
Nonaccrual loans negatively impact the Company’s net interest margin.
2 unchanged sentences
However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis.
−Removed: Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $992,000 for the nine months ended September 30, 2022 and $1.7 million for the nine months ended September 30, 2021.
+Added: Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $358,000 for the three months ended March 31, 2023 and $376,000 for the three months ended March 31, 2022.
Only a small amount of this interest is expected to be ultimately collected.
−Removed: Approximately $2.0 million of nonaccrual loans were guaranteed by government agencies at September 30, 2022.
−Removed: Restructured loans totaled $2.2 million at September 30, 2022 compared to $3.7 million at December 31, 2021.
−Removed: The Company charges interest on principal balances outstanding during deferral periods.
−Removed: As a result, the current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings whose terms were modified during the period were not considered to be material.
−Removed: The classification of a loan as nonperforming does not necessarily indicate that loan principal and interest will ultimately be uncollectible;
+Added: Approximately $6.4 million of nonaccrual loans were guaranteed by government agencies at March 31, 2023.
+Added: The classification of a loan as nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible;
although, in an economic downturn, the Company’s experience has been that the level of collections declines.
−Removed: The above normal risk associated with nonperforming loans has been considered in the determination of the allowance for credit losses.
−Removed: At September 30, 2022, the allowance for credit losses as a percentage of nonperforming and restructured loans was 517.17%, compared to 284.33%, at December 31, 2021.
−Removed: The level of nonperforming loans and credit losses could rise over time as a result of adverse economic conditions.
−Removed: Other real estate owned (OREO) and repossessed assets totaled $39.4 million at September 30, 2022, compared to $39.6 million at December 31, 2021.
−Removed: Other real estate owned consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale.
−Removed: Other real estate owned included a commercial real estate property recorded at $31.2 million at September 30, 2022 and $29.5 million at December 31, 2021.
−Removed: Rental income for this property is included in other noninterest
−Removed: income on the consolidated statements of comprehensive income.
−Removed: Operating expense for this property is included in net expense from other real estate owned in other noninterest expense on the consolidated statements of comprehensive income.
+Added: The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses.
+Added: The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions.
+Added: The allowance for credit losses as a percentage of nonaccrual loans is shown in the table above.
+Added: Modified Loans
+Added: As of January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No.
+Added: 2022-02, which eliminates the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, requires that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty.
+Added: The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material.
+Added: Other Real Estate Owned and Repossessed Assets
+Added: Other real estate owned (OREO) and repossessed assets totaled $38.9 million at March 31, 2023, compared to $36.9 million at December 31, 2022.
+Added: OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale.
+Added: These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell.
+Added: Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses.
+Added: Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO.
+Added: Decreases in values of properties subsequent to their classification as OREO are charged to operating expense.
+Added: OREO included a commercial real estate property recorded at $30.1 million at March 31, 2023 and $29.4 million at December 31, 2022.
+Added: Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income.
+Added: Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income.
This property had the following rental income and operating expenses for the periods presented.
−Removed: Three Months Ended
−Removed: September 30,
−Removed: Nine Months Ended
−Removed: September 30,
+Added: For the Three Months Ended March 31,
(Dollars in thousands)
1 unchanged sentence
Operating expense
−Removed: The Company's total rental income from OREO was $2.5 million for the three months ended September 30, 2022 compared to $2.9 million for the three months ended September 30, 2021 and $8.1 million for the nine months ended September 30, 2022 compared to $7.5 million for the nine months ended September 30, 2021.
−Removed: In addition, the Company's total OREO holding expense was $2.5 million for the three months ended September 30, 2022 compared to $2.1 million for the three months ended September 30, 2021 and $7.6 million for the nine months ended September 30, 2022 compared to $6.8 million for the nine months ended September 30, 2021.
−Removed: Other real estate owned and repossessed assets are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell.
−Removed: Write-downs arising at the time of reclassification of such properties from loans to other real estate owned are charged directly to the allowance for credit losses.
−Removed: Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to other real estate owned.
−Removed: Decreases in values of properties subsequent to their classification as other real estate owned are charged to operating expense.
+Added: The Company's total rental income from OREO was approximately $2.8 million for the three months ended March 31, 2023 and for the three months ended March 31, 2022.
+Added: In addition, the Company's total OREO holding expense was approximately $2.6 million for the three months ended March 31, 2023 compared to approximately $2.5 million for the three months ended March 31, 2022.
Intangible Assets, Goodwill and Other Assets
−Removed: Identifiable intangible assets and goodwill totaled $202.9 million and $167.5 million at September 30, 2022 and December 31, 2021, respectively.
−Removed: The increase in goodwill and intangible assets was due the acquisition of Worthington on February 8, 2022, which added $5.9 million of core deposit intangibles and $32.1 million of goodwill.
−Removed: See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
−Removed: Other assets includes the cash surrender value of key-man life insurance policies totaling $82.2 million at September 30, 2022 and $81.4 million at December 31, 2021.
−Removed: Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $45.2 million at September 31, 2022 and $8.9 million at December 31, 2021.
+Added: Identifiable intangible assets and goodwill totaled $201.2 million and $202.0 million at March 31, 2023 and December 31, 2022, respectively.
+Added: Other assets includes the cash surrender value of key-man life insurance policies totaling $83.3 million at March 31, 2023 and $82.7 million at December 31, 2022.
+Added: Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $26.0 million at March 31, 2023 and $20.7 million at December 31, 2022.
These derivative financial instruments have increased due to the increase in oil and gas prices and customer activity.
−Removed: They require a daily margin to be posted, which fluctuates with oil and gas prices.
−Removed: The margins have increased during 2022 due to the current increase in oil and gas prices and customer activity.
−Removed: The margins are included in other assets totaling $24.7 million at September 30, 2022 and $14.3 million at December 31, 2021.
+Added: They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity.
+Added: At March 31, 2023, the Company had a margin liability included in other liabilities in the amount of $4.6 million.
+Added: At December 31, 2022, the Company had a margin asset included in other assets in the amount of $6.6 million.
See Note (11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.
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The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income.
−Removed: The balance of equity securities was $14.3 million at September 30, 2022 and $10.6 million at December 31, 2021.
+Added: The balance of equity securities was $15.0 million at March 31, 2023 and $15.5 million at December 31, 2022.
The Company reviews its portfolio of equity securities for impairment at least quarterly.
+Added: The balance of other assets included equity interests of previous borrowers in the oil and gas industry that were received through bankruptcy proceedings, which totaled $20.3 million at March 31, 2023 and $21.4 million at December 31, 2022.
+Added: Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded at cost but is adjusted periodically to record as income the bank’s proportionate share of the investee’s earnings or losses and decreased by the amount of cash dividends or similar distributions received from the investee.
Low Income Housing and New Market Tax Credit Investments
−Removed: During 2022, there have not been any material changes in the Company’s low income housing tax credit investments and new market tax credit investments, which are included in other assets on the Company’s consolidated balance sheet.
+Added: During 2023, there have not been any material changes in the Company’s low income housing tax credit ("LIHTC") investments and NMTC investments, which are included in other assets on the Company’s consolidated balance sheet.
+Added: During the quarter the Company adopted ASU 2023-02 and recorded $21.8 million in other assets and other liabilities on the consolidated balance sheet for unfunded LIHTC commitments and amortized $977,000 of NMTC investments to income tax expense during the period that would have previously been recorded to other expense.
See Note (6) of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, for disclosures regarding these investments.
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The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process.
−Removed: The Company currently does not rely heavily on long-term
−Removed: borrowings and does not utilize brokered CDs.
−Removed: The Company maintains federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding.
+Added: The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs.
+Added: The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding.
+Added: The Company is highly liquid with 23% of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets.
There have not been any other material changes from the liquidity and funding discussion included in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: At September 30, 2022, deposits totaled $11.1 billion, an increase of $3.0 billion or 36.7% from the December 31, 2021 total.
−Removed: The increase in deposits was primarily related to the return of funds from off-balance sheet sweep accounts related to the Company’s year-end sweep program.
+Added: At March 31, 2023, deposits totaled $10.6 billion, a decrease of $364.1 million from December 31, 2022 as demand deposits moved into the Company's off balance sheet sweep product.
The Company’s core deposits provide it with a stable, low-cost funding source.
−Removed: Core deposits as a percentage of total deposits were 98.3% at September 30, 2022 and 98.2% at December 31, 2021.
−Removed: Noninterest-bearing deposits to total deposits were 47.1% at September 30, 2022, compared to 46.7% at December 31, 2021.
−Removed: Off-balance sheet sweep accounts totaled $3.0 billion at September 30, 2022 compared to $5.1 billion at December 31, 2021, which included a temporary sweep amount of $2.3 billion.
+Added: The Company’s core deposits as a percentage of total deposits were 97.8% at March 31, 2023 and 98.1% at December 31, 2022.
+Added: Noninterest-bearing deposits to total deposits were 42.8% at March 31, 2023, compared to 45.1% at December 31, 2022.
+Added: Off-balance sheet sweep accounts totaled $4.1 billion at March 31, 2023 compared to $3.7 billion at December 31, 2022.
+Added: The Company's sweep accounts affected the balances of both assets and deposits.
Subordinated Debt
−Removed: 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 to various institutional accredited investors.
See Note (6) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.
−Removed: Short-Term Borrowings
+Added: Short-Term Borrowings and Lines of Credit
Short-term borrowings, consisting primarily of federal funds purchased and repurchase agreements, are another source of funds for the Company.
The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained.
−Removed: Short-term borrowings were $4.6 million at September 30, 2022.
−Removed: The Company did not have short-term borrowings at December 31, 2021.
−Removed: Lines of Credit
−Removed: BancFirst has a line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas to use for liquidity or to match-fund certain long-term fixed-rate loans.
−Removed: In addition, BancFirst has a $25.0 million line of credit with another financial institution that is an overnight federal funds facility.
−Removed: As of September 30, 2022 and December 31, 2021, BancFirst had no advances outstanding under either line of credit.
−Removed: Pegasus has a $20.0 million line of credit with another financial institution that is an overnight federal funds facility.
−Removed: As of September 30, 2022 and December 31, 2021, Pegasus had no advances outstanding under its line of credit.
−Removed: Worthington has an $8.5 million line of credit with another financial institution that is an overnight federal funds facility, and a line of credit from the FHLB of Dallas, Texas to use for liquidity or to match-fund certain long-term fixed rate loans.
−Removed: Worthington had no advances outstanding as of September 30, 2022 under either line of credit.
+Added: Short-term borrowings were $203.5 million at March 31, 2023, compared to $300,000 at December 31, 2022.
+Added: The increase in short-term borrowings was due to BancFirst taking a $200.0 million advance on its line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas, which was paid off on April 3, 2023.
+Added: The Company has several lines of credit it can use.
+Added: At March 31, 2023, BancFirst had $560.3 million available on its line of credit from the FHLB of Topeka, Kansas and a $25.0 million line of credit with another financial institution that is an overnight federal funds facility.
+Added: Pegasus has a federal funds line of credit with BancFirst for $50.0 million.
+Added: Worthington has a $25.0 million federal funds line of credit with BancFirst, a $10.5 million line of credit with another financial institution that is an overnight federal funds facility, a federal reserve discount window capacity of $28.2 million and a $69.9 million line of credit from the FHLB of Dallas, Texas.
Capital Resources
Stockholders’
−Removed: equity totaled $1.2 billion at both September 30, 2022 and December 31, 2021.
+Added: equity totaled $1.3 billion at March 31, 2023 an increase of $60.0 million from December 31, 2022.
In addition to net income of $57.5 million, other changes in stockholders’
−Removed: equity during the nine months ended September 30, 2022 included $7.0 million related to common stock issuances for stock option exercises and $1.5 million related to stock-based compensation, that were partially offset by $36.7 million in dividends and a $84.4 million decrease in accumulated other comprehensive income.
−Removed: The Company’s leverage ratio and total risk-based capital ratios at September 30, 2022 were well in excess of the regulatory requirements.
+Added: equity during the three months ended March 31, 2023 included $642,000 related to common stock issuances for stock option exercises, $382,000 related to stock-based compensation and a $14.6 million increase in accumulated other comprehensive income that were partially offset by $13.2 million in dividends.
+Added: The Company’s leverage ratio and total risk-based capital ratios at March 31, 2023, were well in excess of the regulatory requirements.
See Note (8) of the Notes to Consolidated Financial Statements for a discussion of capital ratios and requirements.
Liquidity Risk and Off-Balance Sheet Arrangements
−Removed: There have not been any material changes in the Company’s liquidity and off-balance sheet arrangements included in Management’s Discussion and Analysis which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
+Added: There have not been any material changes in the Company’s liquidity risk and off-balance sheet arrangements included in Management’s Discussion and Analysis which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Quantitative and Qualitative Disclosures About Market Risk.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.