BANCFIRST CORP /OK/ 10-Q

Item 1. Financial Statements. BANCFIRST CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands) March 31, December 31, 2024 2023 (unaudited) (see Note 1) ASSETS Cash and due from banks $ 183,491 $ 225,462 Interest-bearing deposits with banks 2,341,604 2,172,001 Federal funds sold 1,209 1,316 Debt securities held for investment (fair value: $ 1,129 and $ 1,190 , respectively) 1,129 1,190 Debt securities available for sale at fair value 1,533,522 1,553,905 Loans held for sale 5,997 3,489 Loans held for investment (net of unearned interest) 7,781,860 7,656,645 Allowance for credit losses ( 97,267 ) ( 96,800 ) Loans, net of allowance for credit losses 7,684,593 7,559,845 Premises and equipment, net 284,057 278,594 Other real estate owned 34,728 33,718 Intangible assets, net 15,818 16,704 Goodwill 182,263 182,263 Accrued interest receivable and other assets 334,014 343,555 Total assets $ 12,602,425 $ 12,372,042 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing $ 3,849,807 $ 3,982,226 Interest-bearing 7,059,814 6,717,896 Total deposits 10,909,621 10,700,122 Short-term borrowings 9,699 3,351 Accrued interest payable and other liabilities 127,678 148,577 Subordinated debt 86,115 86,101 Total liabilities 11,133,113 10,938,151 Stockholders' equity: Senior preferred stock, $ 1.00 par; 10,000,000 shares authorized; none issued — — Cumulative preferred stock, $ 5.00 par; 900,000 shares authorized; none issued — — Common stock, $ 1.00 par, 40,000,000 shares authorized; shares issued and outstanding: 32,966,678 and 32,933,018 , respectively 32,967 32,933 Capital surplus 176,227 174,695 Retained earnings 1,312,464 1,276,305 Accumulated other comprehensive loss, net of tax benefit of $ 16,201 and $ 15,473 , respectively ( 52,346 ) ( 50,042 ) Total stockholders' equity 1,469,312 1,433,891 Total liabilities and stockholders' equity $ 12,602,425 $ 12,372,042 The accompanying Notes are an integral part of these consolidated financial statements. 2 BANCFIRST CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Dollars in thousands, except per share data) Three Months Ended March 31, 2024 2023 INTEREST INCOME Loans, including fees $ 132,126 $ 104,396 Securities: Taxable 9,181 8,991 Tax-exempt 20 7 Federal funds sold 19 32 Interest-bearing deposits with banks 30,297 32,020 Total interest income 171,643 145,446 INTEREST EXPENSE Deposits 64,413 35,177 Short-term borrowings 96 83 Subordinated debt 1,030 1,030 Total interest expense 65,539 36,290 Net interest income 106,104 109,156 Provision for credit losses 4,015 2,322 Net interest income after provision for credit losses 102,089 106,834 NONINTEREST INCOME Trust revenue 5,088 4,222 Service charges on deposits 16,428 21,231 Securities transactions ( 267 ) ( 213 ) Sales of loans 491 604 Insurance commissions 9,455 8,741 Cash management 8,651 6,734 (Loss)/gain on sale of other assets ( 59 ) 479 Other 5,113 6,030 Total noninterest income 44,900 47,828 NONINTEREST EXPENSE Salaries and employee benefits 51,528 49,252 Occupancy, net 5,206 4,983 Depreciation 4,556 4,643 Amortization of intangible assets 886 880 Data processing services 2,616 2,107 Net expense from other real estate owned 2,202 2,459 Marketing and business promotion 2,256 2,527 Deposit insurance 1,438 1,613 Other 12,091 11,853 Total noninterest expense 82,779 80,317 Income before taxes 64,210 74,345 Income tax expense 13,876 16,812 Net income $ 50,334 $ 57,533 NET INCOME PER COMMON SHARE Basic $ 1.53 $ 1.75 Diluted $ 1.50 $ 1.72 OTHER COMPREHENSIVE (LOSS)/GAIN Unrealized (losses)/gains on debt securities, net of tax benefit/(expense) of $ 728 and $( 4,504 ), respectively ( 2,304 ) 14,649 Other comprehensive (loss)/gain, net of tax benefit/(expense) of $ 728 and $( 4,504 ), respectively ( 2,304 ) 14,649 Comprehensive income $ 48,030 $ 72,182 The accompanying Notes are an integral part of these consolidated financial statements. 3 BANCFIRST CORPORATION CONSOLIDATED STATEM ENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2024 2023 COMMON STOCK Issued at beginning of period $ 32,933 $ 32,876 Shares issued for stock options 34 24 Issued at end of period $ 32,967 $ 32,900 CAPITAL SURPLUS Balance at beginning of period $ 174,695 $ 169,231 Common stock issued for stock options 817 618 Stock-based compensation arrangements 715 382 Balance at end of period $ 176,227 $ 170,231 RETAINED EARNINGS Balance at beginning of period $ 1,276,305 $ 1,120,292 Net income 50,334 57,533 Dividends on common stock ($ 0.43 and $ 0.40 per share, respectively) ( 14,175 ) ( 13,160 ) Balance at end of period $ 1,312,464 $ 1,164,665 ACCUMULATED OTHER COMPREHENSIVE LOSS Unrealized (losses)/gains on securities: Balance at beginning of period $ ( 50,042 ) $ ( 71,563 ) Net change ( 2,304 ) 14,649 Balance at end of period $ ( 52,346 ) $ ( 56,914 ) Total stockholders’ equity $ 1,469,312 $ 1,310,882 The accompanying Notes are an integral part of these consolidated financial statements. 4 BANCFIRST CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (Dollars in thousands) Three Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 50,334 $ 57,533 Adjustments to reconcile to net cash provided by operating activities: Provision for credit losses 4,015 2,322 Depreciation and amortization 5,442 5,523 Net amortization of securities premiums and discounts ( 306 ) ( 273 ) Realized securities losses 267 213 Gain on sales of loans ( 491 ) ( 604 ) Cash receipts from the sale of loans originated for sale 28,773 34,246 Cash disbursements for loans originated for sale ( 30,789 ) ( 33,634 ) Deferred income tax benefit ( 822 ) ( 778 ) Gain on sale of other assets ( 122 ) ( 578 ) Increase in interest receivable ( 2,517 ) ( 1,390 ) Increase in interest payable 3,374 2,264 Amortization of stock-based compensation arrangements 715 382 Excess tax benefit from stock-based compensation arrangements ( 470 ) ( 324 ) Other, net 8,921 4,602 Net cash provided by operating activities 66,324 69,504 INVESTING ACTIVITIES Net decrease in federal funds sold 107 1,766 Purchases of available for sale debt securities — ( 91,312 ) Proceeds from maturities, calls and paydowns of held for investment debt securities 61 170 Proceeds from maturities, calls and paydowns of available for sale debt securities 17,657 32,940 Purchase of equity securities ( 366 ) ( 195 ) Proceeds from paydowns and sales of equity securities 42 485 Net change in loans ( 130,801 ) ( 176,739 ) Net (payments)/receipts on derivative asset contracts ( 19,595 ) 11,141 Purchases of premises, equipment and computer software ( 10,251 ) ( 7,962 ) Purchase of tax credits ( 429 ) ( 536 ) Other, net 2,346 1,658 Net cash used in investing activities ( 141,229 ) ( 228,584 ) FINANCING ACTIVITIES Net change in deposits 209,499 ( 364,125 ) Net change in short-term borrowings 6,348 203,194 Issuance of common stock in connection with stock options, net 851 642 Cash dividends paid ( 14,161 ) ( 13,150 ) Net cash provided by (used in) financing activities 202,537 ( 173,439 ) Net increase/(decrease) in cash, due from banks and interest-bearing deposits 127,632 ( 332,519 ) Cash, due from banks and interest-bearing deposits at the beginning of the period 2,397,463 3,168,910 Cash, due from banks and interest-bearing deposits at the end of the period $ 2,525,095 $ 2,836,391 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 62,164 $ 34,026 Cash paid during the period for income taxes $ 249 $ 1,880 Noncash investing and financing activities: Unpaid common stock dividends declared $ 14,175 $ 13,160 The accompanying Notes are an integral part of these consolidated financial statements. 5 BANCFIRST CORPORATION NOTES TO CONSOLIDATE D FINANCIAL STATEMENTS (Unaudited) (1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Basis of Presentation 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"). 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. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements. The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with U.S. GAAP for interim financial information and the instructions for Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). The information contained in the consolidated financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period. The unaudited interim consolidated financial statements contained herein reflect all adjustments, which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. Reclassifications Certain items in prior consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for credit losses, income taxes, the fair value of financial instruments and the valuation of assets and liabilities acquired in a business combination, including identifiable intangible assets. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported. Recent Accounting Pronouncements Standards Not Yet Adopted: In December 2023, the Financial Accounting Standards Board (“FASB“) issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company does not expect adoption of the standard to have a material impact on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The amendments are to be applied retrospectively to all periods presented and segment expense categories are required to be based on the categories identified at adoption. The Company is currently evaluating the provisions of this ASU and expects to adopt them for the year ending December 31, 2024. The Company does no t expect the adoption to have a significant impact on the Company’s consolidated financial statements. 6 (2) SECURITIES The following table summarizes the amortized cost and estimated fair values of debt securities held for investment: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2024 (Dollars in thousands) Mortgage backed securities (1) $ 4 $ — $ — $ 4 States and political subdivisions 625 — — 625 Other securities 500 — — 500 Total $ 1,129 $ — $ — $ 1,129 December 31, 2023 Mortgage backed securities (1) $ 5 $ — $ — $ 5 States and political subdivisions 685 — — 685 Other securities 500 — — 500 Total $ 1,190 $ — $ — $ 1,190 The following table summarizes the amortized cost and estimated fair values of debt securities available for sale: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2024 (Dollars in thousands) U.S. treasuries $ 1,545,588 $ — $ ( 65,207 ) $ 1,480,381 U.S. federal agencies 10,729 119 ( 4 ) 10,844 Mortgage backed securities (1) 16,049 9 ( 1,795 ) 14,263 States and political subdivisions 10,100 7 ( 137 ) 9,970 Asset backed securities 11,440 — ( 188 ) 11,252 Other securities 8,163 — ( 1,351 ) 6,812 Total $ 1,602,069 $ 135 $ ( 68,682 ) $ 1,533,522 December 31, 2023 U.S. treasuries $ 1,560,265 $ 415 $ ( 62,635 ) $ 1,498,045 U.S. federal agencies 11,631 142 ( 3 ) 11,770 Mortgage backed securities (1) 16,459 13 ( 1,677 ) 14,795 States and political subdivisions 10,108 16 ( 114 ) 10,010 Asset backed securities 12,794 — ( 282 ) 12,512 Other securities 8,163 — ( 1,390 ) 6,773 Total $ 1,619,420 $ 586 $ ( 66,101 ) $ 1,553,905 (1) Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies. 7 The maturities of debt securities held for investment and available for sale are summarized in the following table using contractual maturities. Actual maturities may differ from contractual maturities due to obligations that are called or prepaid. 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. March 31, 2024 December 31, 2023 Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value (Dollars in thousands) Held for Investment Contractual maturity of debt securities: Within one year $ 351 $ 351 $ 350 $ 350 After one year but within five years 778 778 840 840 After five years but within ten years — — — — After ten years — — — — Total $ 1,129 $ 1,129 $ 1,190 $ 1,190 Available for Sale Contractual maturity of debt securities: Within one year $ 389,115 $ 382,870 $ 348,318 $ 341,645 After one year but within five years 1,167,880 1,108,898 1,223,529 1,167,973 After five years but within ten years 10,278 8,848 10,331 8,851 After ten years 34,796 32,906 37,242 35,436 Total debt securities $ 1,602,069 $ 1,533,522 $ 1,619,420 $ 1,553,905 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: March 31, 2024 December 31, 2023 (Dollars in thousands) Book value of pledged securities $ 908,521 $ 591,324 8 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, 2024 or March 31, 2023. 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. The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at March 31, 2024 and December 31, 2023 respectively: Less than 12 Months More than 12 Months Total Number of investments Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses Estimated Fair Value Unrealized Losses (Dollars in thousands) March 31, 2024 Available for Sale U.S. treasuries 67 $ 90,252 $ 816 $ 1,370,129 $ 64,391 $ 1,460,381 $ 65,207 U.S. federal agencies 3 1,057 4 — — 1,057 4 Mortgage backed securities 71 1,191 6 12,767 1,789 13,958 1,795 States and political subdivisions 9 867 3 2,128 134 2,995 137 Asset backed securities 1 — — 11,252 188 11,252 188 Other securities 3 — — 6,812 1,351 6,812 1,351 Total 154 $ 93,367 $ 829 $ 1,403,088 $ 67,853 $ 1,496,455 $ 68,682 December 31, 2023 Available for Sale U.S. treasuries 68 $ 4,838 $ 90 $ 1,401,669 $ 62,545 $ 1,406,507 $ 62,635 U.S. federal agencies 3 1,100 3 — — 1,100 3 Mortgage backed securities 74 80 — 13,261 1,677 13,341 1,677 States and political subdivisions 6 306 4 1,847 110 2,153 114 Asset backed securities 1 — — 12,512 282 12,512 282 Other securities 3 — — 6,773 1,390 6,773 1,390 Total 155 $ 6,324 $ 97 $ 1,436,062 $ 66,004 $ 1,442,386 $ 66,101 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. Furthermore, as of March 31, 2024 and December 31, 2023, 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. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. The Company has no intent or requirement to sell before the recovery of the unrealized loss; therefore, no impairment loss was realized in the Company’s consolidated statement of comprehensive income. 9 (3) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS Loans held for investment are summarized by portfolio segment as follows: March 31, 2024 December 31, 2023 (Dollars in thousands) Real estate: Commercial real estate owner occupied 962,203 960,944 Commercial real estate non-owner occupied 1,531,185 1,486,420 Construction and development < 60 months 669,726 642,643 Construction residential real estate < 60 months 280,686 283,486 Residential real estate first lien 1,283,879 1,258,744 Residential real estate all other 252,635 244,696 Agriculture 449,812 427,139 Commercial non-real estate 1,320,840 1,289,452 Consumer non-real estate 465,166 476,467 Oil and gas 565,728 586,654 Total (1) $ 7,781,860 $ 7,656,645 (1) Excludes accrued interest receivable of $ 40.9 million at March 31, 2024 and $ 39.4 million at December 31, 2023, that is recorded in accrued interest receivable and other assets. The Company's loans are currently 84 % held by BancFirst and 16 % held by Pegasus and Worthington. In addition, approximately 70 % of the Company's loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and/or securities. The Company’s interest in collateral is secured through filing mortgages and liens, or by possession of the collateral. 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, 2023. Other Real Estate Owned and Repossessed Assets and Loan Modifications The following is a summary of other real estate owned and repossessed assets: March 31, 2024 December 31, 2023 (Dollars in thousands) Other real estate owned and repossessed assets $ 35,116 $ 34,200 As of both March 31, 2024 and December 31, 2023, other real estate owned included a commercial real estate property recorded at approximately $ 30.4 million and $ 29.4 million, respectively. The increase in OREO and this commercial real estate property was due to tenant improvements during the three months ended March 31, 2024. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in noninterest expense on the consolidated statements of comprehensive income. This property had the following rental income and operating expenses for the periods presented. For the Three Months Ended March 31, 2024 2023 (Dollars in thousands) Rental income $ 2,941 $ 2,690 Operating expense 2,250 2,381 During the three months ended March 31, 2024 , the Company sold property held in other real estate owned for a total gain of $ 177,000 , compared to a total gain of $ 98,000 in the three months ended March 31, 2023. 10 The Company charges interest on principal balances outstanding on modified loans during deferral periods. 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. The recorded balance of loans modified during the three months ended March 31, 2024 was approximately $ 1.1 million compared to $ 5.3 million during the year ended December 31, 2023. Nonaccrual loans The Company did no t recognize any interest income on nonaccrual loans for either the three months ended March 31, 2024 or 2023. In addition, all loans identified as nonaccrual loans have related allowances for credit losses at March 31, 2024 and December 31, 2023, respectively. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 696,000 for the three months ended March 31, 2024 and approximately $ 358,000 for the three months ended March 31, 2023. Nonaccrual loans guaranteed by government agencies totaled approximately $ 6.6 million at March 31, 2024 and approximately $ 6.7 million at December 31, 2023. The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment. March 31, 2024 December 31, 2023 (Dollars in thousands) Real estate: Commercial real estate owner occupied $ 2,282 $ 1,686 Commercial real estate non-owner occupied 3,010 874 Construction and development < 60 months 20,142 800 Construction residential real estate < 60 months 755 638 Residential real estate first lien 2,919 3,336 Residential real estate all other 531 899 Agriculture 2,169 3,662 Commercial non-real estate 7,518 10,101 Consumer non-real estate 703 449 Oil and gas 1,967 2,128 Total $ 41,996 $ 24,573 11 Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of the Company's loans held for investment: Age Analysis of Past Due Loans 30-59 Days Past Due 60-89 Days Past Due 90 Days and Greater Total Past Due Loans Current Loans Total Loans Accruing Loans 90 Days or More Past Due (Dollars in thousands) As of March 31, 2024 Real estate: Commercial real estate owner occupied $ 7,283 $ 18 $ 5,594 $ 12,895 $ 949,308 $ 962,203 $ 3,670 Commercial real estate non-owner occupied 297 63 1,806 2,166 1,529,019 1,531,185 876 Construction and development < 60 months 501 2,654 800 3,955 665,771 669,726 — Construction residential real estate < 60 months 2,920 1,411 407 4,738 275,948 280,686 — Residential real estate first lien 4,584 1,000 1,650 7,234 1,276,645 1,283,879 780 Residential real estate all other 1,297 370 624 2,291 250,344 252,635 115 Agriculture 1,348 1,032 728 3,108 446,704 449,812 215 Commercial non-real estate 2,550 1,385 6,461 10,396 1,310,444 1,320,840 312 Consumer non-real estate 3,672 755 867 5,294 459,872 465,166 364 Oil and gas 501 — — 501 565,227 565,728 — Total $ 24,953 $ 8,688 $ 18,937 $ 52,578 $ 7,729,282 $ 7,781,860 $ 6,332 As of December 31, 2023 Real estate: Commercial real estate owner occupied $ 1,386 $ 26 $ 5,598 $ 7,010 $ 953,934 $ 960,944 $ 4,377 Commercial real estate non-owner occupied 2,224 7,371 1,786 11,381 1,475,039 1,486,420 913 Construction and development < 60 months 198 158 800 1,156 641,487 642,643 — Construction residential real estate < 60 months 1,542 206 405 2,153 281,333 283,486 332 Residential real estate first lien 3,879 1,204 1,849 6,932 1,251,812 1,258,744 731 Residential real estate all other 757 190 613 1,560 243,136 244,696 549 Agriculture 1,694 724 1,227 3,645 423,494 427,139 579 Commercial non-real estate 1,501 436 10,028 11,965 1,277,487 1,289,452 1,714 Consumer non-real estate 3,248 1,090 594 4,932 471,535 476,467 347 Oil and gas — — 92 92 586,562 586,654 — Total $ 16,429 $ 11,405 $ 22,992 $ 50,826 $ 7,605,819 $ 7,656,645 $ 9,542 Credit Quality Indicators The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions. The general characteristics of the risk grades and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2023, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented. The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades: 12 Term Loans Amortized Cost Basis by Origination Year Revolving Loans (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Amortized Cost Basis Total As of March 31, 2024 Commercial real estate owner occupied Grade 1 $ 25,173 $ 109,028 $ 159,208 $ 116,637 $ 82,223 $ 203,263 $ 18,941 $ 714,473 Grade 2 6,168 34,656 46,355 44,871 22,165 40,867 22,938 218,020 Grade 3 4,031 7,629 3,640 5,303 890 3,055 2,100 26,648 Grade 4 — 374 23 170 352 1,654 150 2,723 Grade 5 — — — — — 339 — 339 Total commercial real estate owner occupied 35,372 151,687 209,226 166,981 105,630 249,178 44,129 962,203 Commercial real estate non-owner occupied Grade 1 $ 30,431 $ 217,786 $ 266,193 $ 187,861 $ 116,004 $ 120,132 $ 32,534 $ 970,941 Grade 2 13,104 163,293 144,208 85,378 45,784 93,020 2,731 547,518 Grade 3 6,109 — 781 1,703 — 247 — 8,840 Grade 4 — 2,280 632 352 98 524 — 3,886 Total commercial real estate non-owner occupied 49,644 383,359 411,814 275,294 161,886 213,923 35,265 1,531,185 Construction and development < 60 months Grade 1 $ 29,037 $ 89,815 $ 147,644 $ 50,050 $ 5,324 $ 7,984 $ 42,282 $ 372,136 Grade 2 24,777 126,003 62,244 26,007 6,561 15,166 8,778 269,536 Grade 3 — 6,352 893 357 — 70 19,342 27,014 Grade 4 — — 800 100 140 — — 1,040 Total construction and development < 60 months 53,814 222,170 211,581 76,514 12,025 23,220 70,402 669,726 Construction residential real estate < 60 months Grade 1 $ 34,249 $ 84,861 $ 14,251 $ 8,620 $ 99 $ 559 $ 38,050 $ 180,689 Grade 2 28,843 58,132 2,135 21 12 — 1,305 90,448 Grade 3 — 8,191 374 — — — — 8,565 Grade 4 578 200 206 — — — — 984 Total construction residential real estate < 60 months 63,670 151,384 16,966 8,641 111 559 39,355 280,686 Residential real estate first lien Grade 1 $ 72,174 $ 268,280 $ 214,401 $ 167,456 $ 110,847 $ 204,350 $ 4,637 $ 1,042,145 Grade 2 14,813 49,624 42,664 37,763 24,732 51,823 — 221,419 Grade 3 232 2,987 2,691 2,538 1,710 5,622 — 15,780 Grade 4 91 913 218 725 712 1,876 — 4,535 Total residential real estate first lien 87,310 321,804 259,974 208,482 138,001 263,671 4,637 1,283,879 Residential real estate all other Grade 1 $ 8,258 $ 36,264 $ 21,550 $ 6,892 $ 7,585 $ 14,383 $ 55,776 $ 150,708 Grade 2 1,682 5,082 5,290 1,434 1,595 3,611 78,539 97,233 Grade 3 455 292 176 196 166 671 1,590 3,546 Grade 4 — 119 24 — — 111 894 1,148 Total residential real estate all other 10,395 41,757 27,040 8,522 9,346 18,776 136,799 252,635 Agriculture Grade 1 $ 13,547 $ 57,413 $ 47,429 $ 33,676 $ 25,336 $ 48,773 $ 49,003 $ 275,177 Grade 2 11,754 25,588 21,021 17,212 9,303 20,012 48,165 153,055 Grade 3 1,602 8,528 819 966 2,591 3,328 1,931 19,765 Grade 4 — 768 627 53 99 267 1 1,815 Total Agriculture 26,903 92,297 69,896 51,907 37,329 72,380 99,100 449,812 Commercial non-real estate Grade 1 $ 38,088 $ 177,037 $ 163,957 $ 148,673 $ 32,770 $ 64,198 $ 317,586 $ 942,309 Grade 2 24,463 106,857 33,066 17,747 6,480 13,144 161,984 363,741 Grade 3 1,184 1,930 2,260 1,015 283 196 3,411 10,279 Grade 4 126 122 1,494 228 473 360 1,240 4,043 Grade 5 — 18 — — — 450 — 468 Total commercial non-real estate 63,861 285,964 200,777 167,663 40,006 78,348 484,221 1,320,840 Consumer non-real estate Grade 1 $ 52,889 $ 180,937 $ 90,786 $ 49,021 $ 14,926 $ 9,321 $ 11,638 $ 409,518 Grade 2 4,202 18,228 14,005 6,266 1,906 1,323 2,299 48,229 Grade 3 565 1,714 1,493 1,221 295 360 10 5,658 Grade 4 94 420 611 390 155 85 6 1,761 Total consumer non-real estate 57,750 201,299 106,895 56,898 17,282 11,089 13,953 465,166 Oil and gas Grade 1 $ 70,735 $ 71,998 $ 6,206 $ 28,039 $ 6,172 $ 3,205 $ 252,952 $ 439,307 Grade 2 55,581 11,759 5,278 829 386 358 51,437 125,628 Grade 3 — — — 185 — — — 185 Grade 4 — — — 148 — 460 — 608 Total oil and gas 126,316 83,757 11,484 29,201 6,558 4,023 304,389 565,728 Total loans held for investment $ 575,035 $ 1,935,478 $ 1,525,653 $ 1,050,103 $ 528,174 $ 935,167 $ 1,232,250 $ 7,781,860 13 The following tables summarize the Company's gross charge-offs by year of origination for the periods indicated: Term Loans Amortized Cost Basis by Origination Year Revolving Loans 2024 2023 2022 2021 2020 Prior Amortized Cost Basis Total (Dollars in thousands) Three months ended March 31, 2024 Commercial real estate owner occupied Current-period gross charge-offs $ — $ — $ — $ 15 $ — $ — $ — $ 15 Commercial real estate non-owner occupied Current-period gross charge-offs — 12 — — 1 — — 13 Construction and development < 60 months Current-period gross charge-offs — — — — — — — — Construction residential real estate < 60 months Current-period gross charge-offs — 3 — — — — — 3 Residential real estate first lien Current-period gross charge-offs 1 — — 1 — 21 — 23 Residential real estate all other Current-period gross charge-offs — — — — — 2 27 29 Agriculture Current-period gross charge-offs — — 31 — — — — 31 Commercial non-real estate Current-period gross charge-offs — 1,001 275 132 12 126 1,508 3,054 Consumer non-real estate Current-period gross charge-offs — 244 97 51 13 15 11 431 Oil and gas Current-period gross charge-offs — 9 83 — — — — 92 Total current-period gross charge-offs $ 1 $ 1,269 $ 486 $ 199 $ 26 $ 164 $ 1,546 $ 3,691 Term Loans Amortized Cost Basis by Origination Year Revolving Loans 2023 2022 2021 2020 2019 Prior Amortized Cost Basis Total (Dollars in thousands) Three months ended March 31, 2023 Commercial real estate owner occupied Current-period gross charge-offs $ — $ 7 $ 1 $ 22 $ 18 $ — $ — $ 48 Commercial real estate non-owner occupied Current-period gross charge-offs — — — — — 3 — 3 Construction and development < 60 months Current-period gross charge-offs — 2 — — — — — 2 Construction residential real estate < 60 months Current-period gross charge-offs — — — — — — — — Residential real estate first lien Current-period gross charge-offs — — — — — 2 — 2 Residential real estate all other Current-period gross charge-offs — 2 19 — 1 4 — 26 Agriculture Current-period gross charge-offs — 4 — 16 13 2 — 35 Commercial non-real estate Current-period gross charge-offs — 67 62 — — 47 — 176 Consumer non-real estate Current-period gross charge-offs — 76 32 15 9 6 2 140 Oil and gas Current-period gross charge-offs — — — — — — — — Total current-period gross charge-offs $ — $ 158 $ 114 $ 53 $ 41 $ 64 $ 2 $ 432 14 Allowance for Credit Losses Methodology 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 current expected credit loss ("CECL") model. The allowance for current expected credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The allowance for credit losses methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The following table details activity in the allowance for credit losses on loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Allowance for Credit Losses Balance at beginning of period Charge- offs Recoveries Net charge-offs Provision for /(benefit from) credit losses on loans Balance at end of period (Dollars in thousands) Three Months Ended March 31, 2024 Real estate: Commercial real estate owner occupied $ 7,483 $ ( 15 ) $ 20 $ 5 $ ( 20 ) $ 7,468 Commercial real estate non-owner occupied 33,080 ( 13 ) — ( 13 ) 113 33,180 Construction and development < 60 months 3,950 — — — 2,646 6,596 Construction residential real estate < 60 months 3,414 ( 3 ) — ( 3 ) 53 3,464 Residential real estate first lien 4,914 ( 23 ) 4 ( 19 ) 28 4,923 Residential real estate all other 1,646 ( 29 ) 5 ( 24 ) 30 1,652 Agriculture 6,137 ( 31 ) 12 ( 19 ) 19 6,137 Commercial non-real estate 22,745 ( 3,054 ) 33 ( 3,021 ) 758 20,482 Consumer non-real estate 4,401 ( 431 ) 69 ( 362 ) 296 4,335 Oil and gas 9,030 ( 92 ) — ( 92 ) 92 9,030 Total $ 96,800 $ ( 3,691 ) $ 143 $ ( 3,548 ) $ 4,015 $ 97,267 Allowance for Credit Losses Balance at beginning of period Charge- offs Recoveries Net charge-offs Provision for /(benefit from) credit losses on loans Balance at end of period (Dollars in thousands) Three Months Ended March 31, 2023 Real estate: Commercial real estate owner occupied $ 6,416 $ ( 48 ) $ 49 $ 1 $ 130 $ 6,547 Commercial real estate non-owner occupied 30,190 ( 3 ) — ( 3 ) 1,933 32,120 Construction and development < 60 months 3,778 ( 2 ) 3 1 ( 171 ) 3,608 Construction residential real estate < 60 months 3,275 — — — ( 49 ) 3,226 Residential real estate first lien 4,092 ( 2 ) 3 1 361 4,454 Residential real estate all other 1,418 ( 26 ) 2 ( 24 ) 50 1,444 Agriculture 6,217 ( 35 ) 6 ( 29 ) 80 6,268 Commercial non-real estate 25,106 ( 176 ) 22 ( 154 ) 127 25,079 Consumer non-real estate 4,132 ( 140 ) 57 ( 83 ) 183 4,232 Oil and gas 8,104 — — — ( 322 ) 7,782 Total $ 92,728 $ ( 432 ) $ 142 $ ( 290 ) $ 2,322 $ 94,760 15 Purchased Credit Deteriorated Loans The Company has previously purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The Company did not purchase credit-deteriorated loans during the three month period ended March 31, 2024 or March 31, 2023. Collateral Dependent Loans 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. During the three months ended March 31, 2024 and 2023 , 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: Collateral Type Real Estate Business Assets Other Assets Total Specific Allocation (Dollars in thousands) As of March 31, 2024 Real estate: Commercial real estate owner occupied $ — $ — $ — $ — $ — Commercial real estate non-owner occupied 632 — — 632 250 Construction and development < 60 months 24,977 — — 24,977 2,825 Construction residential real estate < 60 months 628 — — 628 134 Residential real estate first lien 125 — — 125 54 Residential real estate all other 81 — — 81 82 Agriculture 1,837 490 15 2,342 1,386 Commercial non-real estate — 5,320 112 5,432 1,582 Consumer non-real estate — — 280 280 140 Oil and gas — — — — — Total collateral-dependent loans held for investment $ 28,280 $ 5,810 $ 407 $ 34,497 $ 6,453 Collateral Type Real Estate Business Assets Other Assets Total Specific Allocation (Dollars in thousands) As of December 31, 2023 Real estate: Commercial real estate owner occupied $ — $ — $ — $ — $ — Commercial real estate non-owner occupied 632 — — 632 250 Construction and development < 60 months 800 — — 800 225 Construction residential real estate < 60 months 638 — — 638 134 Residential real estate first lien 189 — — 189 62 Residential real estate all other 140 — — 140 140 Agriculture 1,841 593 15 2,449 1,386 Commercial non-real estate — 6,090 241 6,331 1,867 Consumer non-real estate — — 147 147 88 Oil and gas — — — — — Total collateral-dependent loans held for investment $ 4,240 $ 6,683 $ 403 $ 11,326 $ 4,152 Non-Cash Transfers from Loans and Premises and Equipment 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. 16 Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows: Three Months Ended March 31, 2024 2023 (Dollars in thousands) Other real estate owned $ 1,582 $ 565 Repossessed assets 455 395 Total $ 2,037 $ 960 (4) INTANGIBLE ASSETS AND GOODWILL The following is a summary of intangible assets as of the date listed: Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Dollars in thousands) March 31, 2024 Core deposit intangibles $ 33,550 $ ( 17,884 ) $ 15,666 Customer relationship intangibles 3,350 ( 3,198 ) 152 Total $ 36,900 $ ( 21,082 ) $ 15,818 December 31, 2023 Core deposit intangibles $ 33,550 $ ( 17,027 ) $ 16,523 Customer relationship intangibles 3,350 ( 3,169 ) 181 Total $ 36,900 $ ( 20,196 ) $ 16,704 The following is a summary of goodwill by business segment: BancFirst Metropolitan Banks BancFirst Community Banks Pegasus Worthington Other Financial Services Executive, Operations & Support Consolidated (Dollars in thousands) Three months ended March 31, 2024 Balance at beginning and end of period $ 13,767 $ 61,420 $ 68,855 $ 32,133 $ 5,464 $ 624 $ 182,263 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, 2023 . (5) SUBORDINATED DEBT In January 2004, the Company established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. The Company owns all of the common securities of BFC II. In February 2004, BFC II issued $ 25 million of aggregate liquidation amount of 7.20 % Cumulative Trust Preferred Securities (the “Cumulative Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $ 1 million in Cumulative Trust Preferred Securities through the execution of an over-allotment option. The proceeds from the sale of the Cumulative Trust Preferred Securities and the common securities of BFC II were invested in $ 26.8 million of 7.20 % Junior Subordinated Debentures of the Company. Interest payments on the $ 26.8 million of 7.20 % Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year . Such interest payments may be deferred for up to twenty consecutive quarters. 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. 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. 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. The Cumulative Trust Preferred Securities have been callable at par, in whole or in part, since March 31, 2009. 17 On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $ 60 million aggregate principal amount of 3.50 % Fixed-to-Floating Rate Subordinated Notes due 2036 (the “Subordinated Notes”) to various institutional accredited investors. The sale of the Subordinated Notes was pursuant to a Subordinated Note Purchase Agreement entered into with each of the investors. The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. The net proceeds to the Company from the sale of the Subordinated Notes were approximately $ 59.15 million net of commissions and offering expenses. The Company used the proceeds from the sale of the Subordinated Notes for general corporate purposes. 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. The Subordinated Notes mature on June 30, 2036 . The Company may, at its option, beginning with the interest payment date of June 30, 2031, and on any scheduled interest payment date thereafter, redeem the Subordinated Notes, in whole or in part. In addition, the Company may redeem all, but not less than all, of the Subordinated Notes at any time upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event” or an “Investment Company Event” (each as defined in the Subordinated Notes). Any such redemption is subject to obtaining the prior approval of the Board of Governors of the Federal Reserve System (or its designee). The redemption price with respect to any such redemption will be equal to 100 % of the principal amount of the Subordinated Note, or portion thereof, to be redeemed, plus accrued but unpaid interest, if any, thereon to, but excluding, the redemption date. (6) STOCK-BASED COMPENSATION On May 25, 2023, the shareholders of the Company adopted the BancFirst Corporation 2023 Restricted Stock Unit Plan (the "RSU Plan"). The RSU Plan was effective as of June 1, 2023 and for a period of ten years thereafter. The RSU Plan will continue in effect after such ten-year period until all matters relating to the payment of awards and administration of the RSU Plan have been settled. At March 31, 2024 there were 462,925 shares available for future grants. The restricted stock units ("RSU's") vest beginning two years from the date of grant at the rate of 20 % per year for five years . The RSUs are settled and distributed as of each vesting date. The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of grant. The following table is a summary of the activity under the Company's RSU plan. Wgtd. Avg. Restricted Grant Date Stock Units Fair Value Three Months Ended March 31, 2024 Nonvested at December 31, 2023 32,075 $ 87.23 Granted 6,500 88.49 Forfeited ( 1,500 ) 83.61 Nonvested at March 31, 2024 37,075 87.59 The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999. As of March 31, 2024, there are 15,923 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. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100 % of their board fees. 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. 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. There were 5,022 and 17,392 shares of common stock distributed from the Deferred Stock Compensation Plan during the three months ended March 31, 2024 and 2023, respectively. A summary of the accumulated stock units under the Deferred Stock Compensation Plan is as follows: March 31, 2024 December 31, 2023 Accumulated stock units 116,816 119,575 Average price $ 41.58 $ 40.03 18 The Company terminated the BancFirst Corporation Stock Option Plan (the “Employee Plan”) on June 1, 2023 . The remaining options will continue to vest and are exercisable beginning four years from the date of grant at the rate of 25 % per year for four years , and expire no later than the end of fifteen years from the date of grant . The Company terminated the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “Non-Employee Directors’ Plan”) on June 1, 2023 . The remaining options will continue to vest and are exercisable beginning one year from the date of grant at the rate of 25 % per year for four years , and expire no later than the end of fifteen years from the date of grant. The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’ Plan: Wgtd. Avg. Wgtd. Avg. Remaining Aggregate Exercise Contractual Intrinsic Options Price Term Value (Dollars in thousands, except option data) Three Months Ended March 31, 2024 Outstanding at December 31, 2023 1,241,391 $ 53.12 Options exercised ( 28,638 ) 24.73 Options canceled, forfeited, or expired ( 8,500 ) 94.68 Outstanding at March 31, 2024 1,204,253 53.50 9.56 Yrs. $ 41,580 Exercisable at March 31, 2024 542,253 36.58 6.65 Yrs. $ 27,898 The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’ Plan: Three Months Ended March 31, 2024 2023 (Dollars in thousands) Total intrinsic value of options exercised $ 1,831 $ 352 Cash received from options exercised 708 221 Tax benefit realized from options exercised 440 85 The Company currently uses newly issued shares for stock option exercises, but reserves the right to use shares purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future. Although not required or expected, the Company may settle some options or restricted stock units in cash on a limited basis at the discretion of the Company. The Company had no cash settlements during the three months ended March 31, 2024 or March 31, 2023. Stock-based compensation expense is charged to salaries and benefits expense on the Consolidated Statements of Comprehensive Income. The components of stock-based compensation expense for all share-based compensation plans and related tax benefits are as follows: Three Months Ended March 31, 2024 2023 (Dollars in thousands) Stock-based compensation expense $ 715 $ 382 Tax benefit 172 92 Stock-based compensation expense, net of tax $ 543 $ 290 19 The Company will continue to amortize the unearned stock-based compensation expense over the remaining weighted average vesting period of approximately five years for unvested stock options and six years for unvested RSUs. The following table shows the unearned stock-based compensation expense for unvested stock options and unvested RSUs: March 31, 2024 (Dollars in thousands) Unearned stock-based compensation expense for unvested stock options $ 9,454 Unearned stock-based compensation expense for unvested RSU's 3,010 (7) STOCKHOLDERS’ EQUITY The Company has adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity. In addition, the SRP may be used to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP is determined by management and approved by the Company’s Executive Committee. The following table is a summary of the shares under the SRP: Three Months Ended March 31, 2024 2023 Shares remaining to be repurchased 479,784 500,486 20 BancFirst Corporation, BancFirst, Pegasus and Worthington are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“FDIC”). These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of assets, liabilities and certain off-balance-sheet items calculated under regulatory practices. 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. The Company believes that as of March 31, 2024 , BancFirst Corporation, BancFirst, Pegasus and Worthington each met all capital adequacy requirements to which they are subject. The actual and required capital amounts and ratios are shown in the following table: Required To Be Well For Capital With Capitalized Under Adequacy Capital Conservation Prompt Corrective Actual Purposes Buffer Action Provisions Amount Ratio Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) As of March 31, 2024: Total Capital (to Risk Weighted Assets)- BancFirst Corporation $ 1,506,155 17.19 % $ 701,043 8.00 % $ 920,119 10.50 % N/A N/A BancFirst 1,193,811 15.94 % 599,307 8.00 % 786,591 10.50 % $ 749,134 10.00 % Pegasus 143,914 17.11 % 67,275 8.00 % 88,299 10.50 % 84,094 10.00 % Worthington 52,335 12.10 % 34,612 8.00 % 45,428 10.50 % 43,265 10.00 % Common Equity Tier 1 Capital (to Risk Weighted Assets)- BancFirst Corporation $ 1,323,577 15.10 % $ 394,337 4.50 % $ 613,413 7.00 % N/A N/A BancFirst 1,091,417 14.57 % 337,110 4.50 % 524,394 7.00 % $ 486,937 6.50 % Pegasus 133,391 15.86 % 37,842 4.50 % 58,866 7.00 % 54,661 6.50 % Worthington 48,295 11.16 % 19,469 4.50 % 30,285 7.00 % 28,122 6.50 % Tier 1 Capital (to Risk Weighted Assets)- BancFirst Corporation $ 1,349,577 15.40 % $ 525,782 6.00 % $ 744,858 8.50 % N/A N/A BancFirst 1,111,417 14.84 % 449,480 6.00 % 636,764 8.50 % $ 599,307 8.00 % Pegasus 133,391 15.86 % 50,456 6.00 % 71,480 8.50 % 67,275 8.00 % Worthington 48,295 11.16 % 25,959 6.00 % 36,775 8.50 % 34,612 8.00 % Tier 1 Capital (to Quarterly Average Assets)- BancFirst Corporation $ 1,349,577 10.99 % $ 491,387 4.00 % N/A N/A N/A N/A BancFirst 1,111,417 10.62 % 418,449 4.00 % N/A N/A $ 523,062 5.00 % Pegasus 133,391 10.64 % 50,133 4.00 % N/A N/A 62,666 5.00 % Worthington 48,295 8.49 % 22,742 4.00 % N/A N/A 28,427 5.00 % As of March 31, 2024 , BancFirst, Pegasus and Worthington were classified by the Federal Reserve as “well capitalized” under the prompt corrective action provisions. The Common Equity Tier 1 Capital of BancFirst Corporation, BancFirst, Pegasus and Worthington includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, the election was made to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1 Capital. Common Equity Tier 1 Capital for BancFirst Corporation, BancFirst, Pegasus and Worthington is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. The Company’s trust preferred securities have continued to be included in Tier 1 capital, as the Company’s total assets do not exceed $ 15 billion. The Company's Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. BancFirst, Pegasus and Worthington have had no events or conditions that management believes would materially change their category under capital requirements existing as of the report dates. 21 (8) NET INCOME PER COMMON SHARE Basic and diluted net income per common share are calculated as follows: Three Months Ended March 31, 2024 2023 (Dollars in thousands, except per share data) (Numerator) Income available to common stockholders $ 50,334 $ 57,533 (Denominator) Weighted average shares outstanding for basic earnings per common share 32,947,983 32,892,857 Dilutive effect of stock compensation 565,429 569,882 Weighted-average shares outstanding for diluted earnings per common share 33,513,412 33,462,739 Basic earnings per share $ 1.53 $ 1.75 Diluted earnings per share $ 1.50 $ 1.72 The following table shows the number of options and RSU's that were excluded from the computation of diluted net income per common share for each period because they were anti-dilutive for the period: Shares Three Months Ended March 31, 2024 270,417 Three Months Ended March 31, 2023 309,833 (9) FAIR VALUE MEASUREMENTS Accounting standards define fair value as the price that would be received to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date. FASB Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: • Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. This category includes certain collaterally dependent loans, repossessed assets, other real estate owned, goodwill and other intangible assets. Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis A description of the valuation methodologies and key inputs used to measure financial assets and financial liabilities at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to the following categories of the Company’s financial assets and financial liabilities. Debt Securities Available for Sale Debt securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other debt securities available for sale including U.S. federal agencies, registered mortgage backed debt securities and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade 22 execution data, market consensus prepayment speeds, credit information and a bond’s terms and conditions, among other things. The Company also invests in private label mortgage backed debt securities for which observable information is not readily available. These debt securities are reported at fair value utilizing Level 3 inputs. For these debt securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors. Discount rates are primarily based on reference to interest rate spreads on comparable debt securities of similar duration and credit rating as determined by the nationally recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar debt securities. The Company reviews the prices for Level 1 and Level 2 debt securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio debt securities that are esoteric or that have complicated structures. The Company’s portfolio primarily consists of traditional investments including U.S. Treasury obligations, federal agency mortgage pass-through debt securities, general obligation municipal bonds and municipal revenue bonds. Pricing for such instruments is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters for pricing mentioned in the preceding paragraph adjusted for the specific issue. Periodically, the Company will validate prices supplied by the independent pricing service by comparison to prices obtained from third party sources. Derivatives Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer and market quotations to value its oil and gas swaps and options. 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: Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Fair Value (Dollars in thousands) March 31, 2024 Debt securities available for sale: U.S. Treasury $ 1,480,381 $ — $ — $ 1,480,381 U.S. federal agencies — 10,844 — 10,844 Mortgage-backed securities — 14,263 — 14,263 States and political subdivisions — 9,790 180 9,970 Asset backed securities — 11,252 — 11,252 Other debt securities — 6,812 — 6,812 Derivative assets — 27,445 — 27,445 Derivative liabilities — 25,520 — 25,520 December 31, 2023 Debt securities available for sale: U.S. Treasury $ 1,498,045 $ — $ — $ 1,498,045 U.S. federal agencies — 11,770 — 11,770 Mortgage-backed securities — 14,795 — 14,795 States and political subdivisions — 9,830 180 10,010 Asset backed securities — 12,512 — 12,512 Other debt securities 6,773 6,773 Derivative assets — 41,099 — 41,099 Derivative liabilities — 39,176 — 39,176 23 The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows: Three Months Ended March 31, Twelve Months Ended December 31, 2024 2023 (Dollars in thousands) Balance at the beginning of the year $ 180 $ 454 Transfers to level 2 — ( 244 ) Settlements — ( 30 ) Balance at the end of the period $ 180 $ 180 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. During the three months ended March 31, 2024, the Company did not transfer any debt securities. During the year ended December 31, 2023, the Company transferred debt securities from Level 3 to Level 2 due to a review of the pricing models that determined some state and political subdivision securities to be Level 2. Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities are reported at fair value utilizing Level 3 inputs. The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. When the Company determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. In no case does the fair value of a collateral dependent loan exceed the fair value of the underlying collateral. The collateral dependent loans are adjusted to fair value through a specific allocation of the allowance for credit losses or a direct charge-down of the loan. Repossessed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible credit losses based upon the fair value of the repossessed asset. Other real estate owned is revalued at fair value subsequent to initial recognition, with any losses recognized in net expense from other real estate owned. The following table summarizes assets measured at fair value on a nonrecurring basis during the period presented. These nonrecurring fair values do not represent all assets, only those assets that have been adjusted during the reporting period: Total Fair Value Level 3 (Dollars in thousands) As of and for the Year-to-date Period Ended March 31, 2024 Equity securities $ 13,176 Collateral dependent loans 230 Repossessed assets 238 Other real estate owned 2,709 As of and for the Year-to-date Period Ended December 31, 2023 Equity securities $ 13,144 Collateral dependent loans 1,894 Repossessed assets 474 Other real estate owned 31,773 24 Estimated Fair Value of Financial Instruments The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instruments that are not recorded at fair value. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity. The following methods and assumptions are used to estimate the fair value of each class of financial instruments: Cash and Cash Equivalents Include: Cash and Due from Banks and Interest-Bearing Deposits with Banks The carrying amount of these short-term instruments is based on a reasonable estimate of fair value. Federal Funds Sold The carrying amount of these short-term instruments is a reasonable estimate of fair value. Debt Securities Held for Investment For debt securities held for investment, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar debt securities making adjustments for credit or liquidity if applicable. Loans Held For Sale The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank, allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are valued using Level 2 inputs. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis. Loans Held For Investment To determine the fair value of loans held for investment, the Company uses an exit price calculation, which takes into account factors such as liquidity, credit and the nonperformance risk of loans. For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. The fair values of other types of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Deposits The fair values of transaction and savings accounts are the amounts payable on demand at the reporting date. The fair values of fixed-maturity certificates of deposit are estimated using the rates currently offered for deposits of similar remaining maturities. Short-Term Borrowings The amounts payable on these short-term instruments are reasonable estimates of fair value. Subordinated Debt The fair values of subordinated debt are estimated using the rates that would be charged for subordinated debt of similar remaining maturities. Loan Commitments and Letters of Credit The fair values of commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair values of letters of credit are based on fees currently charged for similar agreements. 25 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: March 31, 2024 December 31, 2023 Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in thousands) FINANCIAL ASSETS Level 2 inputs: Cash and cash equivalents $ 2,525,095 $ 2,525,095 $ 2,397,463 $ 2,397,463 Federal funds sold 1,209 1,209 $ 1,316 1,316 Debt securities held for investment 4 4 5 5 Loans held for sale 5,997 5,997 3,489 3,489 Level 3 inputs: Debt securities held for investment 1,125 1,125 1,185 1,185 Loans, net of allowance for credit losses 7,684,593 8,436,154 7,559,845 7,356,768 FINANCIAL LIABILITIES Level 2 inputs: Deposits 10,909,621 10,421,046 10,700,122 10,413,348 Short-term borrowings 9,699 9,699 3,351 3,351 Subordinated debt 86,115 78,255 86,101 79,271 OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS Loan commitments 4,577 4,875 Letters of credit 599 637 Non-financial Assets and Non-financial Liabilities Measured at Fair Value The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. In addition, the Company has no non-financial liabilities measured at fair value on a nonrecurring basis. Non-financial assets measured at fair value on a nonrecurring basis include intangible assets. The intangible assets are evaluated at least annually for impairment. The overall levels of non-financial assets measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at March 31, 2024 or December 31, 2023 . 26 (10) DERIVATIVE FINANCIAL INSTRUMENTS The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, to mitigate the exposure to fluctuations in oil and gas prices, the Company simultaneously enters into an offsetting contract with a counterparty. These derivatives are not designated as hedged instruments and are recorded on the Company's consolidated balance sheet at fair value and are included in other assets. The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices. At March 31, 2024 , the Company had a margin asset included in other assets in the amount of $ 4.3 million. At December 31, 2023 , the Company had a margin liability in other liabilities in the amount of $ 15.5 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: March 31, 2024 December 31, 2023 Oil and Natural Gas Swaps and Options Notional Units Notional Amount Estimated Fair Value Notional Amount Estimated Fair Value (Notional amounts and dollars in thousands) Oil Derivative assets Barrels 4,489 $ 5,892 3,896 $ 20,567 Derivative liabilities Barrels ( 4,489 ) ( 4,822 ) ( 3,896 ) ( 19,512 ) Gas/Natural Gas Liquids Derivative assets MMBTUs/Gallons 40,106 21,553 46,140 20,532 Derivative liabilities MMBTUs/Gallons ( 40,106 ) ( 20,698 ) ( 46,140 ) ( 19,664 ) Total Fair Value Included in Derivative assets Other assets 27,445 41,099 Derivative liabilities Other liabilities ( 25,520 ) ( 39,176 ) The following table is a summary of the Company's recognized income related to the activity, which was included in other noninterest income: Three Months Ended March 31, 2024 2023 (Dollars in thousands) Derivative income $ 103 $ 89 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. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by the market price movements. The Company's share of total profit is approximately 35 %. Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor's) and monitoring market information. The following table is a summary of the Company's net credit exposure relating to oil and gas swaps and options with bank counterparties: March 31, 2024 December 31, 2023 (Dollars in thousands) Credit exposure $ 14,775 $ 39,527 Balance Sheet Offsetting Derivatives may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. 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. In such cases 27 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. (11) SEGMENT INFORMATION The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The six principal business units are BancFirst metropolitan banks, BancFirst community banks, Pegasus, Worthington, other financial services and executive, operations and support. 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. BancFirst metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. 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. 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. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units. The results of operations and selected financial information for the six business units are as follows: BancFirst Metropolitan Banks BancFirst Community Banks Pegasus Worthington Other Financial Services Executive, Operations & Support Eliminations Consolidated (Dollars in thousands) Three Months Ended March 31, 2024 Net interest income $ 28,193 $ 60,011 $ 10,867 $ 4,389 $ 1,019 $ 1,625 $ — $ 106,104 Noninterest income 5,169 15,918 320 221 15,163 58,428 ( 50,319 ) 44,900 Income before taxes 22,331 38,792 3,145 669 6,335 43,071 ( 50,133 ) 64,210 Three Months Ended March 31, 2023 Net interest income $ 30,739 $ 57,685 $ 15,151 $ 4,624 $ 942 $ 15 $ — $ 109,156 Noninterest income 6,087 19,532 214 279 14,172 66,143 ( 58,599 ) 47,828 Income before taxes 23,310 43,599 9,644 1,630 6,164 48,417 ( 58,419 ) 74,345 Total Assets: March 31, 2024 $ 3,283,434 $ 7,452,457 $ 1,322,543 $ 618,111 $ 111,953 $ 1,404,833 $ ( 1,590,906 ) $ 12,602,425 December 31, 2023 3,598,888 7,012,905 1,280,618 600,364 121,601 1,307,714 ( 1,550,048 ) 12,372,042 The financial information for each business unit is presented on the basis used internally by management to evaluate performance and allocate resources. The Company utilizes a transfer pricing system to allocate the benefit or cost of funds provided or used by the various business units. Certain services provided by the support group to other business units, such as item processing, are allocated at rates approximating the cost of providing the services. Eliminations are adjustments to consolidate the business units and companies. 28 Item 2. Management’s Discussio n and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition as of March 31, 2024 and December 31, 2023 and results of operations for the three months ended March 31, 2024 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2023, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the 2023 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. FORWARD LOOKING STATEMENTS The Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management’s current expectations or forecasts of future events. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions; the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: • The impact of the Durbin Amendment of the Dodd-Frank Act ("Durbin Amendment") on noninterest income beginning July 1, 2023. • Potential impacts of the 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 . • 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 commercial office collateral for the Company's commercial real estate loans. • Political pressures could further limit our ability to charge NSF and overdraft fees. • A continuing shift in deposit mix could negatively impact net interest margin. • Changes in interest rates. • The increased time, effort and non-interest expense related to ongoing and increased regulations from the Federal Reserve, the Consumer Financial Protection Bureau and the Securities and Exchange Commission, including requirements related to environmental, social and governance issues and climate disclosures. • Local, regional, national and international economic conditions and the impact they may have on the Company and its customers. • Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs. • Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations. • Impairment of the Company’s goodwill or other intangible assets. • Changes in consumer spending, borrowing and savings habits. • Changes in the financial performance and/or condition of the Company’s borrowers, including the impact of rising interest rates. • Technological changes. • Cyber threats. 29 • 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. • The Company’s success at managing the risks involved in the foregoing items. Actual results may differ materially from forward-looking statements. SUMMARY The Company’s net income for the first quarter of 2024 was $50.3 million, compared to $57.5 million for the first quarter of 2023. Diluted net income per common share was $1.50 and $1.72 for the first quarter of 2024 and 2023, respectively. The Company’s net interest income for the first quarter of 2024 decreased to $106.1 million from $109.2 million for the first quarter of 2023. Net interest income was negatively impacted by a change in the mix of interest-bearing and non-interest bearing deposits, partially offset by higher loan volume. Net interest margin for the first quarter of 2024 was 3.70% compared to 3.89% for the first quarter of 2023. For the first quarter of 2024, the Company recorded a provision for credit losses of $4.0 million compared to $2.3 million for the first quarter of 2023. Noninterest income for the first quarter of 2024 totaled $44.9 million compared to $47.8 million for the first quarter of 2023. The decrease in noninterest income was primarily due to an approximate $5.3 million reduction of interchange fees related to the impact of the Durbin Amendment. Trust revenue, sweep fees and insurance commissions all increased when compared to last year. Noninterest expense for the first quarter of 2024 increased to $82.8 million compared to $80.3 million for the first quarter of 2023. The increase in noninterest expense was primarily related to growth in salaries and employee benefits of $2.3 million. The Company’s effective tax rate was 21.6% for the first quarter of 2024 compared to 22.6% for the first quarter of 2023. At March 31, 2024, the Company’s total assets were $12.6 billion, an increase of $230.4 million from December 31, 2023. Loans grew $127.7 million, totaling $7.8 billion at March 31, 2024. Deposits totaled $10.9 billion, an increase of $209.5 million from December 31, 2023. Off-balance-sheet sweep accounts totaled $4.6 billion at March 31, 2024, up $224.2 million from December 31, 2023. The Company’s total stockholders’ equity at March 31, 2024 was $1.5 billion, an increase of $35.4 million over December 31, 2023. Asset quality remained strong as the Company’s nonaccrual loans totaled $42.0 million, representing 0.54% of total loans at March 31, 2024 compared to 0.32% at year-end 2023. The allowance for credit losses to total loans was 1.25% at March 31, 2024 virtually unchanged from year-end. Net charge-offs were $3.5 million for the first quarter of 2024 compared to $290,000 for the first quarter of 2023. FUTURE APPLICATION OF ACCOUNTING STANDARDS See Note (1) of the Notes to the Consolidated Financial Statements for disclosures regarding recently issued accounting pronouncements since December 31, 2023, the date of its most recent annual report to stockholders. SEGMENT INFORMATION See Note (11) of the Notes to the Consolidated Financial Statements for disclosures regarding business segments. 30 RESULTS OF OPERATIONS Average Balances, Income, Expenses and Rates The following table presents 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: (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. Loan fees included in interest income were $5.4 million for the three months ended March 31, 2024 compared to $5.6 million for the three months ended March 31, 2023. BANCFIRST CORPORATION CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS (Unaudited) Taxable Equivalent Basis (Dollars in thousands) Three Months Ended March 31, 2024 2023 Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ASSETS Earning assets: Loans (1) $ 7,730,753 $ 132,249 6.86 % $ 7,005,731 $ 104,481 6.05 % Securities – taxable 1,557,806 9,181 2.36 1,572,278 8,991 2.32 Securities – tax exempt 2,642 25 3.76 3,481 9 1.07 Federal funds sold and interest-bearing deposits with banks 2,212,788 30,316 5.50 2,799,540 32,052 4.64 Total earning assets 11,503,989 171,771 5.99 11,381,030 145,533 5.19 Nonearning assets: Cash and due from banks 202,300 218,164 Interest receivable and other assets 804,575 795,316 Allowance for credit losses (97,061 ) (93,316 ) Total nonearning assets 909,814 920,164 Total assets $ 12,413,803 $ 12,301,194 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Money market and interest-bearing checking deposits $ 4,814,772 $ 44,217 3.68 % $ 4,216,293 $ 26,866 2.58 % Savings deposits 1,056,727 9,003 3.42 1,135,035 5,257 1.88 Time deposits 1,027,039 11,193 4.37 705,787 3,054 1.76 Short-term borrowings 8,018 96 4.79 6,844 83 4.94 Subordinated debt 86,106 1,030 4.80 86,049 1,030 4.86 Total interest-bearing liabilities 6,992,662 65,539 3.76 6,150,008 36,290 2.39 Interest-free funds: Noninterest-bearing deposits 3,843,371 4,797,014 Interest payable and other liabilities 131,898 79,735 Stockholders’ equity 1,445,872 1,274,437 Total interest free funds 5,421,141 6,151,186 Total liabilities and stockholders’ equity $ 12,413,803 $ 12,301,194 Net interest income $ 106,232 $ 109,243 Net interest spread 2.23 % 2.80 % Effect of interest free funds 1.47 % 1.09 % Net interest margin 3.70 % 3.89 % 31 Selected income statement data and other selected data for the comparable periods were as follows: BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Unaudited) (Dollars in thousands, except per share data) Three Months Ended March 31, 2024 2023 Income Statement Data Net interest income $ 106,104 $ 109,156 Provision for credit losses 4,015 2,322 Securities transactions (267 ) (213 ) Total noninterest income 44,900 47,828 Salaries and employee benefits 51,528 49,252 Total noninterest expense 82,779 80,317 Net income 50,334 57,533 Per Common Share Data Net income – basic $ 1.53 $ 1.75 Net income – diluted 1.50 1.72 Cash dividends 0.43 0.40 Performance Data Return on average assets 1.63 % 1.90 % Return on average stockholders’ equity 13.96 18.31 Cash dividend payout ratio 28.10 22.86 Net interest spread 2.23 2.80 Net interest margin 3.70 3.89 Efficiency ratio 54.82 51.16 Net charge-offs to average loans 0.05 0.00 Net Interest Income For the three months ended March 31, 2024, net interest income, which is the Company’s principal source of operating revenue, decreased $3.1 million or 2.8% compared to the three months ended March 31, 2023. Net interest income was negatively impacted by a change in the mix of interest-bearing and non-interest bearing deposits, partially offset by higher loan volume. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. As shown in the preceding table, the Company’s net interest margin for the first quarter of 2024 decreased compared to the first quarter of 2023. 32 Changes in the volume of earning assets and interest-bearing liabilities and changes in interest rates, determine the changes in net interest income. The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income. VOLUME/RATE ANALYSIS Taxable Equivalent Basis Change during the three months ended March 31, 2024 Total Due to Volume(1) Due to Rate (Dollars in thousands) INCREASE (DECREASE) Interest Income: Loans $ 27,768 $ 12,224 $ 15,544 Securities—taxable 190 (26 ) 216 Securities—tax exempt 16 (2 ) 18 Federal funds sold and interest-bearing deposits with banks (1,736 ) (6,453 ) 4,717 Total interest income 26,238 5,743 20,495 Interest Expense: Money market and interest-bearing checking deposits 17,351 5,430 11,921 Savings deposits 3,746 (308 ) 4,054 Time deposits 8,139 1,514 6,625 Short-term borrowings 13 (15 ) 28 Subordinated debt — 12 (12 ) Total interest expense 29,249 6,633 22,616 Net interest income $ (3,011 ) $ (890 ) $ (2,121 ) (1) The effects of changes in the mix of earning assets and interest-bearing liabilities have been combined with the changes due to volume. Provision for Credit Losses The provision for credit losses is presented in the preceding table. 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. Net loan charge-offs were $3.5 million for the first quarter of 2024 compared to net loan charge-offs of $290,000 for the first quarter of 2023. 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 Noninterest income, as presented in the preceding table, decreased by $2.9 million for the first quarter of 2024 compared to the first quarter of 2023. The decrease in noninterest income was primarily due to an approximate $5.3 million reduction of interchange fees related to the impact of the Durbin Amendment. Trust revenue, sweep fees and insurance commissions all increased when compared to last year. Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $7.1 million and $6.4 million for the three months ended March 31, 2024 and 2023, respectively. This represents 15.9% and 13.5% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card usage and interchange fees totaling $6.5 million and $12.0 million during the three months ended March 31, 2024 and 2023, respectively. This represents 14.6% and 25.2% of the Company’s noninterest income for the respective periods. The Company is subject to political pressures that could limit our ability to charge for NSF and overdraft fees. Over the last few years the Company lowered the rates charged on NSF and overdraft fees. Also, the Company became subject to the reduced interchange fees under the Durbin Amendment effective July 1, 2023. Consequently, the Company's interchange fee revenue was reduced by approximately $11.2 million in the last half of 2023. The Company expects to experience a reduction of approximately $10.5 million in the first half of 2024. 33 Noninterest Expense Noninterest expense, as presented in the preceding table, increased by $2.5 million for first quarter of 2024 compared to the first quarter of 2023. The increase in noninterest expenses was primarily related to growth in salaries and employee benefits of $2.3 million. Income Taxes The Company’s effective tax rate was 21.6% for the first quarter of 2024, compared to 22.6% for the first quarter of 2023. 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 BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) March 31, December 31, 2024 2023 (unaudited) Balance Sheet Data Total assets $ 12,602,425 $ 12,372,042 Total loans (net of unearned interest) 7,787,857 7,660,134 Allowance for credit losses 97,267 96,800 Debt securities 1,534,651 1,555,095 Deposits 10,909,621 10,700,122 Stockholders' equity 1,469,312 1,433,891 Book value per share 44.57 43.54 Tangible book value per share (non-GAAP)(1) 38.56 37.50 Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) Stockholders' equity $ 1,469,312 $ 1,433,891 Less goodwill 182,263 182,263 Less intangible assets, net 15,818 16,704 Tangible stockholders' equity (non-GAAP) $ 1,271,231 $ 1,234,924 Common shares outstanding 32,966,678 32,933,018 Tangible book value per share (non-GAAP) $ 38.56 $ 37.50 Selected Financial Ratios Balance Sheet Ratios: Average loans to deposits (year-to-date) 71.97 % 68.87 % Average earning assets to total assets (year-to-date) 92.67 92.39 Average stockholders’ equity to average assets (year-to-date) 11.65 11.03 Asset Quality Data Loans past due 90 days and still accruing $ 6,332 $ 9,542 Nonaccrual loans (3) 41,996 24,573 Other real estate owned and repossessed assets 35,116 34,200 Asset Quality Ratios: Nonaccrual loans to total loans 0.54 % 0.32 % Allowance for credit losses to total loans 1.25 1.26 Allowance for credit losses to nonaccrual loans 231.61 393.92 (1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table. (2) Tangible book value per common share is stockholders’ equity less goodwill and intangible assets, net, divided by common shares outstanding. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of the Company. This measure should not be considered a substitute for operating results determined in accordance with GAAP. (3) Government agencies guaranteed approximately $6.6 million of nonaccrual loans at March 31, 2024. Cash and Due from Banks, Federal Funds Sold and Interest-Bearing Deposits with Banks The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increased by $127.5 million or 5.3%, to $2.5 billion from December 31, 2023 to March 31, 2024. The increase was related to an increase of interest-bearing deposits. 34 Securities At March 31, 2024, total debt securities decreased $20.4 million, or 1.3% compared to December 31, 2023. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized loss on debt securities available for sale, before taxes, was $68.5 million at March 31, 2024, compared to a net unrealized loss of $65.5 million at December 31, 2023. These unrealized losses of $52.3 million at March 31, 2024 and $50.0 million at December 31, 2023 are included in the Company’s stockholders’ equity as accumulated other comprehensive loss, net of income tax. The Company did not purchase or sell any debt securities during the quarter ended March 31, 2024. See Note (2) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s securities. Loans At March 31, 2024, total loans increased $127.7 million or 1.7% compared to December 31, 2023 as a result of internal loan growth. The internal loan growth was primarily from the Company's Oklahoma subsidiary BancFirst, with loans essentially flat for the Company's Texas subsidiaries, Pegasus and Worthington. See Note (3) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s loan portfolio segments. Allowance for Credit Losses The allowance for credit losses to total loans was 1.25% at March 31, 2024 compared to 1.26% at December 31, 2023. The overall credit quality of the Company's loan portfolio has remained strong. 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. Nonaccrual Loans Nonaccrual loans totaled $42.0 million at March 31, 2024 compared to $24.6 million at December 31, 2023. The level of the Company's nonaccrual loans remains low. The Company’s nonaccrual loans are primarily construction and development real estate loans and commercial non-real estate loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. 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. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $696,000 for the three months ended March 31, 2024 and $358,000 for the three months ended March 31, 2023. Only a small amount of this interest is expected to be ultimately collected. Approximately $6.6 million of nonaccrual loans were guaranteed by government agencies at March 31, 2024. 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 risk of loss is heightened. The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses. The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions. The allowance for credit losses as a percentage of nonaccrual loans is shown in the table above. Modified Loans As of January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) No. 2022-02, which eliminated 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. 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. The recorded balance of loans modified during the period ended March 31, 2024 was approximately $1.1 million compared to $5.3 million during the year ended December 31, 2023. Other Real Estate Owned and Repossessed Assets Other real estate owned (OREO) and repossessed assets totaled $35.1 million at March 31, 2024 compared to $34.2 million at December 31, 2023. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to 35 operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. OREO included a larger commercial real estate property recorded at $30.4 million at March 31, 2024 and $29.4 million at December 31, 2023. During the quarter ended March 31, 2024, the Company made $996,000 of tenant improvements to this property, which contributed to the increase of total OREO. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. 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: For the Three Months Ended March 31, 2024 2023 (Dollars in thousands) Rental income $ 2,941 $ 2,690 Operating expense 2,250 2,381 The Company's total rental income and operating expenses from OREO are presented in the following table: For the Three Months Ended March 31, 2024 2023 (Dollars in thousands) Rental income $ 3,002 $ 2,820 Operating expense 2,329 2,557 Intangible Assets, Goodwill and Other Assets Identifiable intangible assets and goodwill totaled $198.1 million and $199.0 million at March 31, 2024 and December 31, 2023, respectively. Other assets includes the cash surrender value of key-man life insurance policies totaling $84.4 million at both March 31, 2024 and December 31, 2023. Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $27.4 million at March 31, 2024 and $41.1 million at December 31, 2023. They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity. At March 31, 2024, the Company had a margin asset included in other assets in the amount of $4.3 million. At December 31, 2023, the Company had a margin liability included in other liabilities in the amount of $15.5 million. See Note (10) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments. Equity securities are reported in other assets on the Company’s consolidated balance sheet. The Company invests in equity securities without readily determinable fair values. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $13.2 million at March 31, 2024 and $13.1 million at December 31, 2023. The Company reviews its portfolio of equity securities for impairment at least quarterly. Low-Income Housing and New Market Tax Credit Investments During 2024, there have not been any material changes in the Company’s low-income housing tax credit ("LIHTC") investments and New Markets Tax Credits ("NMTC") investments, which are included in other assets on the Company’s consolidated balance sheet. 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, 2023 for disclosures regarding these investments. Liquidity and Funding The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is 36 determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. 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. The Company is highly liquid with 20% 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, 2023. Deposits At March 31, 2024, deposits totaled $10.9 billion, an increase of $209.5 million from December 31, 2023. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits were 97.1% at March 31, 2024 and 97.4% at December 31, 2023. Noninterest-bearing deposits to total deposits were 35.3% at March 31, 2024 compared to 37.2% at December 31, 2023. Quantitative tightening by the Federal Reserve and competition for deposits has increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest-bearing deposits and off-balance-sheet sweep account products. Off-balance-sheet sweep accounts totaled $4.6 billion at March 31, 2024 compared to $4.3 billion at December 31, 2023. The movement of customers' funds into the Company's off-balance-sheet sweep accounts affected the balances of both cash and deposits. Subordinated Debt See Note (5) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt. 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. Short-term borrowings were $9.7 million at March 31, 2024 compared to $3.4 million at December 31, 2023. The Company has several lines of credit available. At March 31, 2024, BancFirst had $835.0 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. At March 31, 2024, BancFirst had no advances outstanding under either line of credit. Worthington has $10.5 million in lines of credit with other financial institutions that serve as overnight federal funds facilities, a Federal Reserve discount window capacity of $29.0 million and an $81.9 million line of credit from the FHLB of Dallas, Texas to use for liquidity or to match-fund certain long-term rate loans. Worthington has no advances outstanding at March 31, 2024 under any of these lines of credit. Capital Resources Stockholders’ equity totaled $1.5 billion at March 31, 2024, an increase of $35.4 million from December 31, 2023. In addition to net income of $50.3 million, other changes in stockholders’ equity during the three months ended March 31, 2024 included $851,000 related to common stock issuances for stock option exercises and $662,000 related to stock-based compensation that were partially offset by a $2.3 million decrease in accumulated other comprehensive income and $14.2 million in dividends. The Company’s leverage ratio and total risk-based capital ratios at March 31, 2024 were well in excess of the regulatory requirements. See Note (7) of the Notes to Consolidated Financial Statements for a discussion of capital ratios and requirements. Liquidity Risk and Off-Balance-Sheet Arrangements 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, 2023. 37 Item 3. Quantitative and Qualitative Disclosures About Market Risk. There have been no significant changes in the Company’s disclosures regarding market risk since December 31, 2023, the date of its most recent annual report to stockholders.