What changed in this filing

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Item 1. Financial Statements

2021-08-09 compared with 2021-05-05 · 205 added, 113 removed, 660 unchanged (33% of the section changed)

22 unchanged sentences

Accrued interest payable and other liabilities

Junior subordinated debentures

Subordinated debt

Total liabilities

18 unchanged sentences

Three Months Ended

Six Months Ended

INTEREST INCOME

4 unchanged sentences

Short-term borrowings

Junior subordinated debentures

Subordinated debt

Total interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

(Benefit from) provision for credit losses

Net interest income after (benefit from)/provision for credit losses

NONINTEREST INCOME

20 unchanged sentences

OTHER COMPREHENSIVE (LOSS) GAIN

Unrealized (losses)/gains on securities, net of tax of $ 336 and $( 2,176 ) respectively

Unrealized (losses)/gains on debt securities, net of tax of $ 472 , $ 85 , $ 808 and $( 2,091 ) respectively

Comprehensive income

4 unchanged sentences

Three Months Ended

Six Months Ended

Issued at beginning of period

10 unchanged sentences

Balance at beginning of period

Cumulative effect of change in accounting principle, net of tax of $ 925 (Note 2)

Cumulative effect of change in accounting principle, net of tax of $ 925

Dividends on common stock ($ 0.34 , $ 0.32 , $ 0.68 and $ 0.64 per share, respectively)

11 unchanged sentences

(Dollars in thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile to net cash provided by operating activities:

Provision for credit losses

(Benefit from) provision for credit losses

Depreciation and amortization

Net amortization of securities premiums and discounts

Realized securities gains

Realized securities (gains)/losses

Gain on sales of loans

3 unchanged sentences

Gain on sale of other assets

Decrease in interest receivable

Increase/(decrease) in interest receivable

Decrease in interest payable

5 unchanged sentences

Net cash paid from sale of assets and liabilities, net of cash received

Net increase in federal funds sold

Net decrease in federal funds sold

Purchases of held for investment debt securities

11 unchanged sentences

Net change in short-term borrowings

Proceeds from long-term borrowings

Proceeds from issuance of subordinated notes, net of debt issuance costs

Issuance of common stock in connection with stock options, net

10 unchanged sentences

Noncash investing and financing activities:

Cash consideration for acquisitions

Fair value of assets acquired in acquisitions

24 unchanged sentences

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

On February 19, 2021, the Company entered into a purchase and assumption agreement with The First National Bank and Trust Company of Vinita, Oklahoma to purchase certain of its assets and assume its deposits and certain other obligations.

The First National Bank and Trust Company of Vinita is a nationally chartered bank with banking locations in Vinita and Grove, Oklahoma.

These banking locations would become branches of BancFirst.

As of December 31, 2020, the First National Bank and Trust Company of Vinita had approximately $ 285 million in total assets, $ 209 million in loans, and $ 258 million in deposits.

The purchase and assumption is expected to be completed during the second quarter of 2021 and is subject to regulatory approval.

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.

See Note (7) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.

On May 20, 2021, the Company purchased approximately $ 284 million in total assets, which included $ 195 million in loans, and assumed approximately $ 256 million in deposits and certain other obligations, from The First National Bank and Trust Company of Vinita, Oklahoma for a purchase price of $ 21.0 million.

The Company recorded a bargain purchase gain related to this purchase of approximately $ 6.0 million, which is included in other noninterest income on the statement of comprehensive income and other operating activities on the statement of cash flow.

The bargain purchase gain is a noncash item on the statement of cash flow.

In addition, the Company recorded expenses related to this purchase of approximately $ 4.0 million, which are included in noninterest expense.

As a result of the purchase, the Company recorded a core deposit intangible of approximately $ 1.9 million.

The effect of this purchase was included in the consolidated financial statement of the Company from the date of purchase forward.

The purchase did not have a material effect on the Company’s consolidated financial statements.

The First National Bank and Trust Company of Vinita was a nationally chartered bank with two banking locations in Vinita and Grove, Oklahoma.

The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date.

On January 22, 2021, the Company sold approximately $ 21 million in loans and approximately $ 38 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma.

A gain on the transaction of $ 2.5 million is reflected in the first quarter of 2021.

The Company recorded a gain on the transaction of $ 2.5 million, which is included in noninterest income.

The following table summarizes the amortized cost and estimated fair values of debt securities held for investment:

March 31, 2021

June 30, 2021

(Dollars in thousands)

7 unchanged sentences

The following table summarizes the amortized cost and estimated fair values of debt securities available for sale:

March 31, 2021

June 30, 2021

(Dollars in thousands)

12 unchanged sentences

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, 2021

June 30, 2021

December 31, 2020

14 unchanged sentences

The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:

March 31, 2021

June 30, 2021

December 31, 2020

3 unchanged sentences

Loans held for investment are summarized by portfolio segment as follows:

March 31, 2021

June 30, 2021

December 31, 2020

9 unchanged sentences

Other loans (2)

(1) Excludes accrued interest receivable of $ 24.7 million at March 31, 2021 and $ 26.0 million at December 31, 2020, that is recorded in accrued interest receivable and other assets.

(2) Includes PPP loans held for investment of $ 713.7 million, net of unamortized processing fees of $ 23.3 million at March 31, 2021 and $ 652.7 million, net of unamortized processing fees of $ 14.5 million at December 31, 2020.

(1) Excludes accrued interest receivable of $ 22.9 million at June 30, 2021 and $ 26.0 million at December 31, 2020, that is recorded in accrued interest receivable and other assets.

(2) Includes PPP loans held for investment of $ 368.6 million, net of unamortized processing fees of $ 16.6 million at June 30, 2021 and $ 652.7 million, net of unamortized processing fees of $ 14.5 million at December 31, 2020.

Other loans consist of loans approved by the Small Business Administration (“SBA”), which include loans funded through the Paycheck Protection Program (“PPP”).

1 unchanged sentence

In April 2020, the Company began originating loans to qualified small businesses under the PPP administered by the SBA.

During the three months ended March 31, 2021, $ 9.8 million of processing fees were recognized as interest income related to the PPP loans.

T he Company had processing fees, which were recognized as interest income related to the PPP loans totaling $ 11.9 million and $ 3.7 million during the three months ended June 30, 2021 and 2020, respectively and $ 21.7 million and $ 3.7 million during the six months ended June 30, 2021 and 2020, respectively.

BancFirst’s loans are mostly to customers within Oklahoma and approximately 56 % of the loans are secured by real estate.

3 unchanged sentences

The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral.

BancFirst’s commercial and agricultural non-real estate and oil and gas loan categories include upstream and midstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers.

The balance of upstream energy loans was approximately $ 183 million at March 31, 2021 and approximately $ 191 million at December 31, 2020.

The balance of midstream energy loans was approximately $ 33 million at March 31, 2021 and approximately $ 50 million at December 31, 2020.

The balance of the ancillary services energy loans was approximately $ 67 million at March 31, 2021 and approximately $ 59 million at December 31, 2020.

Pegasus Bank’s loans are mostly to customers within Texas and approximately $ 294 million or 54 % of the loans are secured by real estate at March 31, 2021.

Pegasus Bank’s commercial and agricultural non-real estate loans were approximately $ 228 million at March 31, 2021 and approximately $ 262 million at December 31, 2020.

Pegasus Bank’s commercial and agricultural non-real estate loan category includes upstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers.

The balance of upstream energy loans was approximately $ 109 million at March 31, 2021 and approximately $ 107 million at December 31, 2020.

The balance of midstream energy loans was approximately $ 11 million at both March 31, 2021 and December 31, 2020.

The balance of the ancillary services energy loans was approximately $ 15 million at March 31, 2021 and approximately $ 13 million at December 31, 2020.

Pegasus Bank’s loans are mostly to customers within Texas and approximately $ 297 million or 51 % of the loans are secured by real estate at June 30, 2021.

Pegasus Bank’s commercial and agricultural non-real estate loans were approximately $ 268 million at June 30, 2021 and approximately $ 262 million at December 31, 2020.

BancFirst and Pegasus Bank’s commercial and agricultural non-real estate and oil and gas loan categories include upstream and midstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, wellsite preparation contractors and equipment manufacturers.

Energy loans are summarized as follows:

June 30, 2021

December 31, 2020

(Dollars in thousands)

BancFirst energy loans

Ancillary services

Pegasus Bank energy loans

Ancillary services

Accounting policies related to appraisals, and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Troubled Debt Restructur ings , Other Real Estate Owned and Repossessed Assets and Held for Sale Assets

Troubled Debt Restructurings, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets

The following is a summary of troubled debt restructurings and other real estate owned and repossessed assets:

4 unchanged sentences

The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material.

During the first quarter of 2021, the Company sold property held in other real estate owned for a total loss of $ 55,000 , compared to a total gain of $ 2.2 million in the first quarter of 2020.

During the first half of 2021, the Company completed the move to its new corporate headquarters and transferred approximately $ 2.4 million from premises and equipment to other real estate owned related to its previous headquarters.

In addition, other real estate owned of approximately $ 2.5 million was purchased from the First National Bank and Trust Company of Vinita, Oklahoma.

During the first half of 2021, the Company sold property held in other real estate owned for a total loss of $ 105,000 , compared to a total gain of $ 2.3 million in the first half of 2020.

Nonaccrual loans

Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 521,000 for the three months ended March 31, 2021 and approximately $ 332,000 for the three months ended March 31, 2020.

Nonaccrual loans guaranteed by government agencies totaled approximately $ 6.6 million at March 31, 2021 and approximately $ 7.8 million at December 31, 2020.

Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 1.2 million for the six months ended June 30, 2021 and approximately $ 983,000 for the six months ended June 30, 2020.

Nonaccrual loans guaranteed by government agencies totaled approximately $ 3.5 million at June 30, 2021 and approximately $ 7.8 million at December 31, 2020.

The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.

March 31, 2021

June 30, 2021

December 31, 2020

12 unchanged sentences

(Dollars in thousands)

As of March 31, 2021

As of June 30, 2021

Commercial real estate owner occupied

15 unchanged sentences

Consumer non-real estate

Due to the impacts of the COVID-19 pandemic, the Company had approximately $ 88 million in modified loans as of March 31, 2021 and $ 81.7 million in modified loans as of December 31, 2020, most of which were secured by commercial real estate.

Due to the impacts of the COVID-19 pandemic, the Company had approximately $ 61.8 million in modified loans as of June 30, 2021 and $ 81.7 million in modified loans as of December 31, 2020, most of which were secured by commercial real estate.

These modifications were undertaken in response to Section 4013 of the CARES Act and the regulatory intent outlined in the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus and to provide businesses financial flexibility until the economy has time to recover to a more normal level of activity.

8 unchanged sentences

The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.

The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades as of March 31, 2021:

The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades as of June 30, 2021:

Term Loans Amortized Cost Basis by Origination Year

1 unchanged sentence

(Dollars in thousands)

As of March 31, 2021

As of June 30, 2021

Commercial real estate owner occupied

23 unchanged sentences

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist by identifying by portfolio segments, the applicable weighted average life and measuring the allowance for credit losses using the vintage loss analysis adjusted for qualitative factors.

The weighted average life of the Company’s loans segments are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The weighted average lives of the Company’s loans segments are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The decrease in the allowance for credit loss during the second quarter of 2021 was primarily driven by a reversal of provision during the quarter based on sustained improvements in the economy, both nationally and in Oklahoma, which reduced the amount of expected credit loss within the loan portfolio.

This reduction was partially offset by additional allowance for credit loss required by newly acquired loans purchased with credit deterioration.

The following table details activity in the allowance for credit losses on loans for the period presented.

1 unchanged sentence

Allowance for Credit Losses

Initial allowance on loans purchased with credit deterioration

(Benefit from) /Provision

for credit losses on loans

(Dollars in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Commercial real estate owner occupied

6 unchanged sentences

Consumer non-real estate

Six Months Ended June 30, 2021

Commercial real estate owner occupied

Commercial real estate non-owner occupied

Construction and development < 60 months

Construction residential real estate < 60 months

Residential real estate first lien

Residential real estate all other

Commercial and agricultural non-real estate

Consumer non-real estate

Allowance for Credit Losses

1 unchanged sentence

Initial allowance on loans purchased with credit deterioration

Provision for credit losses on loans

Provision for /(benefit from) credit losses on loans

(Dollars in thousands)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Commercial real estate owner occupied

6 unchanged sentences

Consumer non-real estate

Six Months Ended June 30, 2020

Commercial real estate owner occupied

Commercial real estate non-owner occupied

Construction and development < 60 months

Construction residential real estate < 60 months

Residential real estate first lien

Residential real estate all other

Commercial and agricultural non-real estate

Consumer non-real estate

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, 2021.

The credit-deteriorated loans purchased during the three-month period ended March 31, 2020 were as follows:

The credit-deteriorated loans purchased during the six-month periods ended June 30, 2021 and June 30, 2020 were as follows:

Loans acquired

2 unchanged sentences

(Dollars in thousands)

For the period ended March 31, 2020

For the period ended June 30, 2021

Purchase price of loans at acquisition

1 unchanged sentence

Par value of acquired loans at acquisition

For the period ended June 30, 2020

Purchase price of loans at acquisition

Allowance for credit losses at acquisition

Par value of acquired loans at acquisition

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, 2021 and 2020, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.

During the six months ended June 30, 2021 and 2020, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent.

The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:

4 unchanged sentences

(Dollars in thousands)

As of March 31, 2021

As of June 30, 2021

Commercial real estate owner occupied

25 unchanged sentences

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

Six Months Ended

(Dollars in thousands)

4 unchanged sentences

(Dollars in thousands)

As of March 31, 2021

As of June 30, 2021

Core deposit intangibles

5 unchanged sentences

(Dollars in thousands)

Three months ended March 31, 2021

Six months ended June 30, 2021

Balance at beginning and end of period

1 unchanged sentence

The Company has operating leases, which primarily consist of office space in buildings, ATM locations, storage facilities, parking lots, equipment and land on which it owns certain buildings.

Rent expense for all operating leases, including those rented on a monthly or temporary basis totaled approximately $ 503,000 and approximately $ 463,000 for the three months ended March 31, 2021 and March 31, 2020, respectively.

As of March 31, 2021, right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled $ 4.1 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $ 4.0 million.

Rent expense for all operating leases, including those rented on a monthly or temporary basis, totaled approximately $ 462,000 and approximately $ 453,000 for the three months ended June 30, 2021 and June 30, 2020, respectively.

Rent expense for all operating leases, including those rented on a monthly or temporary basis, totaled approximately $ 966,000 and $ 916,000 for the six months ended June 30, 2021 and June 30, 2020, respectively.

As of June 30, 2021, right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled $ 3.8 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $ 3.7 million.

There have been no significant changes in our expected future minimum lease payments since December 31, 2020.

The future minimum lease payments are disclosed in Note (20) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

As of March 31, 2021, our operating leases have a weighted-average remaining lease term of 3.3 years and a weighted-average discount rate of 3.1 percent.

Maturity of Operating Lease Liabilities

March 31, 2021

As of June 30, 2021, our operating leases have a weighted-average remaining lease term of 3.3 years and a weighted-average discount rate of 2.8 percent.

The following table presents minimum future commitments by year for the Company’s operating leases.

Such commitments are reflected as undiscounted values and are reconciled to the discounted present value recognized on the balance sheet.

June 30, 2021

(Dollars in thousands)

2021 (nine months)

2021 (six months)

Total lease payments

3 unchanged sentences

These assets are classified on the balance sheet as premises and equipment.

The Company had operating lease revenue of $ 1.4 million for both the three months ended March 31, 2021 and March 31, 2020.

The Company had operating lease revenue of $ 1.3 million and $ 1.4 million for the three months ended June 30, 2021 and June 30, 2020, respectively.

The Company had operating lease revenue of $ 2.7 million and $ 2.8 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

Lease revenue is included in occupancy, net on the consolidated statement of comprehensive income.

Future Minimum Lease Payments to be received

The Company does not have operating leases that extend beyond 2031.

The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:

March 31, 2021

June 30, 2021

(Dollars in thousands)

2021 (nine months)

2021 (six months)

Total future minimum lease payments

(7) 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 were callable at par, in whole or in part, after March 31, 2009.

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 was approximately $ 59.15 million after deducting commissions and offering expenses of $ 850,000 .

The Company expects to use 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.

STOCK-BASED COMPENSATION

The Company has had a nonqualified incentive stock option plan the BancFirst Corporation Stock Option Plan (the “Employee Plan”) since May 1986.

At March 31, 2021, there were 167,500 shares available for future grants.

At June 30, 2021, there were 275,000 shares available for future grants.

The Employee Plan will terminate on December 31, 2024 , if not extended.

4 unchanged sentences

Each non-employee director is granted an option for 10,000 shares.

At March 31, 2021, there were 30,000 shares available for future grants.

At June 30, 2021, there were 50,000 shares available for future grants.

The Non-Employee Directors’ Plan will terminate on December 31, 2024 , if not extended.

3 unchanged sentences

Although not required or expected, the Company may settle some options in cash on a limited basis at the discretion of the Company.

During the three months ended March 31, 2021, the Company had cash settlements for 121,330 shares for a total cost of $ 3.6 million that did not increase the outstanding shares of the Company.

During the six months ended June 30, 2021, the Company had cash settlements for 121,330 shares for a total net cash settlement of options of $ 5.5 million that did not increase the outstanding shares of the Company.

The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’ Plan:

(Dollars in thousands, except option data)

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Outstanding at December 31, 2020

1 unchanged sentence

Options exercised

Outstanding at March 31, 2021

Exercisable at March 31, 2021

Options canceled, forfeited, or expired

Outstanding at June 30, 2021

Exercisable at June 30, 2021

The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’ Plan:

Three Months Ended

Six Months Ended

(Dollars in thousands)

Total intrinsic value of options exercised

5 unchanged sentences

Three Months Ended

Six Months Ended

(Dollars in thousands)

Stock-based compensation expense

2 unchanged sentences

The following table shows the unearned stock-based compensation expense:

March 31, 2021

June 30, 2021

(Dollars in thousands)

1 unchanged sentence

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:

Three Months Ended

Six Months Ended

Weighted average grant-date fair value per share of options granted

4 unchanged sentences

35.55 to 36.01%

22.84 to 33.56%

Expected term

2 unchanged sentences

The dividend yield is the expected yield for the expected term.

The stock price volatility is

estimated from the recent historical volatility of the Company’s stock.

The stock price volatility is estimated from the recent historical volatility of the Company’s stock.

The expected term is estimated from the historical option exercise experience.

1 unchanged sentence

The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999.

As of March 31, 2021, there are 19,717 shares available for future issuance under the Deferred Stock Compensation Plan.

As of June 30, 2021, there are 40,000 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.

2 unchanged sentences

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 2,161 and 1,307 shares of common stock distributed from the Deferred Stock Compensation Plan during the three months ended March 31, 2021 and March 31, 2020, respectively.

There were 2,161 and 1,307 shares of common stock distributed from the Deferred Stock Compensation Plan during the six months ended June 30, 2021 and June 30, 2020, respectively.

A summary of the accumulated stock units is as follows:

8 unchanged sentences

The following table is a summary of the shares under the program:

Three Months Ended

Six Months Ended

Number of shares repurchased

4 unchanged sentences

Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s financial statements.

Management believes that as of March 31, 2021, the Company, BancFirst and Pegasus Bank met all capital adequacy requirements to which they are subject.

Management believes that as of June 30, 2021, the Company, BancFirst and Pegasus Bank met all capital adequacy requirements to which they are subject.

The actual and required capital amounts and ratios are shown in the following table:

4 unchanged sentences

(Dollars in thousands)

As of March 31, 2021:

As of June 30, 2021:

Total Capital

10 unchanged sentences

BancFirst Corporation

As of March 31, 2021, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst and Pegasus Bank as “well capitalized” under the prompt corrective action provisions.

As of June 30, 2021, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst and Pegasus Bank as “well capitalized” under the prompt corrective action provisions.

The Common Equity Tier 1 Capital of the Company, BancFirst and Pegasus Bank includes common stock and related paid-in capital and retained earnings.

1 unchanged sentence

Common Equity Tier 1 Capital for the Company, BancFirst and Pegasus Bank 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.

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.

There are no conditions or events since the most recent notification of BancFirst and Pegasus Bank’s capital category that management believes would materially change its category under capital requirements existing as of the report date.

2 unchanged sentences

Specifically, a bank may exclude all PPP loans pledged as collateral to the PPP Facility from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility are included.

The PPP loans the Company originated in 2020 and 2021 are included in the calculation of the Company’s leverage ratio as of March 31, 2021 as the Company did not utilize the PPP Facility for funding purposes.

The PPP loans the Company originated in 2020 and 2021 are included in the calculation of the Company’s leverage ratio as of June 30, 2021 as the Company did not utilize the PPP Facility for funding purposes.

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 Subordinated Notes.

The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines.

NET INCOME PER COMMON SHARE

2 unchanged sentences

(Dollars in thousands, except per share data)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Income available to common stockholders

2 unchanged sentences

exercises of stock options

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Income available to common stockholders

2 unchanged sentences

exercises of stock options

Six Months Ended June 30, 2021

Income available to common stockholders

Dilutive effect of stock options

Income available to common stockholders plus assumed

exercises of stock options

Six Months Ended June 30, 2020

Income available to common stockholders

Dilutive effect of stock options

Income available to common stockholders plus assumed

exercises of stock options

The following table shows the number and average exercise price of options that were excluded from the computation of diluted net income per common share for each period because the options were anti-dilutive for the period:

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

FAIR VALUE MEASUREMENTS

14 unchanged sentences

Other debt securities available for sale including U.S.

federal agencies, registered mortgage backed securities and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data.

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.

3 unchanged sentences

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 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 securities.

The Company reviews the prices for Level 1 and Level 2 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 securities that are esoteric or that have complicated structures.

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 securities, general obligation municipal bonds and a small amount of municipal revenue bonds.

Treasury obligations, federal agency mortgage pass-through debt securities, general obligation municipal bonds and a small amount of municipal revenue bonds.

Pricing for such instruments is fairly generic and is easily obtained.

7 unchanged sentences

(Dollars in thousands)

March 31, 2021

Securities available for sale:

June 30, 2021

Debt securities available for sale:

federal agencies

3 unchanged sentences

December 31, 2020

Securities available for sale:

Debt securities available for sale:

federal agencies

3 unchanged sentences

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

Six Months Ended

Twelve Months Ended

1 unchanged sentence

Balance at the beginning of the year

Transfers to level 2

Total unrealized gains/(losses)

Transfers (to)/from level 2

Total unrealized losses

Balance at the end of the period

The Company’s policy is to recognize transfers in and transfers out of Levels 1, 2 and 3 as of the end of the reporting period.

During the three months ended March 31, 2021, the Company transferred securities from Level 3 to Level 2 due to a review of the

pricing models that determined some asset backed securities to be Level 2 .

During the year ended December 31, 2020, the Company transferred securities from Level 2 to Level 3 due to a review of the pricing models that determined some state and political subdivisions bonds to be Level 3 .

During the six months ended June 30, 2021, the Company transferred debt securities from Level 3 to Level 2 due to a review of the pricing models that determined some asset backed debt securities to be Level 2.

During the year ended December 31, 2020, the Company transferred debt securities from Level 2 to Level 3 due to a review of the pricing models that determined some state and political subdivisions bonds to be Level 3.

Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis

3 unchanged sentences

The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs.

These 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.

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.

9 unchanged sentences

(Dollars in thousands)

As of and for the Year-to-date Period Ended March 31, 2021

As of and for the Year-to-date Period Ended June 30, 2021

Equity securities

17 unchanged sentences

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 securities making adjustments for credit or liquidity if applicable.

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

12 unchanged sentences

The amounts payable on these short-term instruments are reasonable estimates of fair value.

Junior Subordinated Debentures

The fair values of junior subordinated debentures are estimated using the rates that would be charged for junior subordinated debentures of similar remaining maturities.

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

14 unchanged sentences

Short-term borrowings

Junior subordinated debentures

Subordinated debt

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

5 unchanged sentences

These items are evaluated at least annually for impairment.

The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at March 31, 2021 or December 31, 2020.

The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at June 30, 2021 or December 31, 2020.

(12) SEGMENT INFORMATION

9 unchanged sentences

(Dollars in thousands)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Net interest income

1 unchanged sentence

Income before taxes

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Net interest income

1 unchanged sentence

Income before taxes

Six Months Ended June 30, 2021

Net interest income

Noninterest income

Income before taxes

Six Months Ended June 30, 2020

Net interest income

Noninterest income

Income before taxes

Total Assets:

March 31, 2021

June 30, 2021

December 31, 2020

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements