<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MARCH 22, 1996
BANCFIRST CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
OKLAHOMA 0-14384 73-1221379
-------- ------- ----------
(State or other Commission File Number (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
101 NORTH BROADWAY, SUITE 200, OKLAHOMA CITY, OKLAHOMA 73102
------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405)270-1086
-------------
<PAGE>
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The audited financial statements of City
Bankshares, Inc. required by this item are
provided as follows:
PAGE
----
Independent Auditors' Report 5
Consolidated Balance Sheet as of December 31,
1995 and 1994 6
Consolidated Statement of Income for the Years
Ended December 31, 1995 and 1994 7
Statement of Cash Flows for the Years Ended
December 31, 1995 and 1994 8
Statement of Stockholders' Equity for the Years
Ended December 31, 1995 and 1994 10
Notes to Financial Statements 11
(b) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information required by
this item is provided as follows:
PAGE
----
Unaudited Pro Forma Consolidated Condensed
Balance Sheet as of December 31, 1995 25
Unaudited Pro Forma Consolidated Condensed
Statement of Income for the Year Ended December
31, 1995 26
Notes to Unaudited Pro Forma Consolidated
Condensed Financial Statements 27
The unaudited pro forma consolidated condensed
financial statements and related notes present
the pro forma effects of the merger described
in Item 2 of this report. The pro forma
consolidated condensed balance sheet is
presented as if the merger occurred at
December 31, 1995. The pro forma consolidated
condensed statement of income for the year
ended December 31, 1995 is presented as if the
merger occurred at January 1, 1995. The merger
was accounted for using the purchase method.
Pro forma data are based on assumptions and
include adjustments as explained in the notes
to the unaudited pro forma consolidated
condensed financial statements. The pro forma
data are not necessarily indicative of the
financial results that would have occurred had
the merger been effective on the date assumed
and should not be viewed as indicative of
operations in future periods. The unaudited
pro forma consolidated condensed financial
statements and related notes should be read in
conjunction with the 1995 BancFirst Corporation
Form 10-K and the audited financial statements
of City Bankshares, Inc. presented elsewhere
herein.
2
<PAGE>
(c) EXHIBITS.
EXHIBIT
NUMBER EXHIBIT.
- ------ -------
2.1 Agreement and Plan of Reorganization dated
September 16, 1995 between BancFirst and City
Bankshares,Inc., (filed as Exhibit 2.2 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 and
incorporated herein by reference).
2.2 Agreement dated September 16, 1995 between
BancFirst and William O. Johnstone (filed as
Exhibit 2.3 to the Company's Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1995 and incorporated herein by
reference).
3
<PAGE>
CITY BANKSHARES, INC.
REPORT AND FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
January 26, 1996
To the Board of Directors and Stockholders
of City Bankshares, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of City
Bankshares, Inc. and its subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the City Bankshares, Inc.'s management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Oklahoma City, Oklahoma
5
<PAGE>
CITY BANKSHARES, INC.
CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------
DECEMBER 31,
1995 1994
---- ----
ASSETS
Cash and due from banks $ 11,182 $ 10,191
Interest bearing deposits with banks 18 24
Federal funds sold 9,750 12,000
Investment securities 39,348 46,303
Loans, net 78,280 66,196
Premises and equipment, net 5,436 6,042
Intangible assets, net 1,250 1,595
Other assets, net 4,445 4,879
Deferred tax asset, net -- 106
--------- ---------
$ 149,709 $147,336
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 45,747 $ 45,751
Interest bearing 87,245 85,996
--------- ---------
Total deposits 132,992 131,747
Long-term borrowings 1,400 1,800
Other liabilities 614 507
Current taxes payable 21 49
Deferred tax liability, net 21
--------- ---------
Total liabilities 135,048 134,103
--------- ---------
Minority interest 336 289
--------- ---------
Commitments and Contingencies (Note 14)
Stockholders' equity:
Common stock; $1.00 par value, 2,000,000
shares authorized; 902,150 and 889,650
shares issued and outstanding in 1995
and 1994, respectively 902 890
Capital surplus 8,114 8,002
Retained earnings 5,312 4,172
Unrealized holding gain (loss) on
investment securities 2 (115)
Treasury stock, at cost (5) (5)
--------- ---------
14,325 12,944
--------- ---------
$ 149,709 $ 147,336
--------- ---------
--------- ---------
The accompanying notes are an integral
part of these financial statements.
6
<PAGE>
CITY BANKSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME (DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1995 1994
---- ----
Interest income:
Loans, including fees $ 6,999 $ 5,716
Investment securities 2,464 2,549
Federal funds sold 221 99
Interest-bearing deposits 1 1
------- --------
Total interest income 9,685 8,365
------- --------
Interest expense:
Deposits 3,201 2,470
Short-term borrowings 39 99
Long-term borrowings 145 126
------- --------
Total interest expense 3,385 2,695
------- --------
Net interest income 6,300 5,670
Provision for possible loan losses 75 22
------- --------
Net interest income after provision
for possible loan losses 6,225 5,648
------- --------
Non-interest income:
Data processing income 9,219 7,896
Service charges on deposits 1,059 1,080
Other 244 250
------- --------
Total non-interest income 10,522 9,226
------- --------
Non-interest expense:
Salaries and employee benefits 7,213 6,388
Occupancy, net 851 945
Depreciation and amortization 1,439 1,392
Net expense from other real estate owned 45 155
Other 4,689 4,010
------- --------
Total non-interest expense 14,237 12,890
------- --------
Income before taxes 2,510 1,984
Income tax expense 1,016 724
------- --------
Net income $ 1,494 $ 1,260
------- --------
------- --------
The accompanying notes are an integral
part of these financial statements.
7
<PAGE>
CITY BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
<S> <C> <C>
Operating activities:
Net income $ 1,494 $ 1,260
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 75 22
Provision for other real estate losses 24 113
Depreciation and amortization 1,439 1,392
Net accretion of investment
security premiums and discounts (54) 311
Accretion of loan discounts, net 39 (28)
Decrease (increase) in interest receivable 62 (193)
Increase in interest payable 80 15
Change in current taxes (28) 87
Change in deferred taxes 52 53
Other, net 422 (162)
--------- --------
Net cash provided by operating activities 3,605 2,870
--------- --------
Investing activities:
Proceeds from sales and maturities of
investment securities 12,493 13,845
Purchases of investment securities (5,293) (19,635)
Net increase in loans (12,198) (773)
Purchases of premises and equipment (488) (1,219)
Decrease in loan to ESOP 117
--------- --------
Net cash used in investing activities (5,486) (7,665)
--------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
CITY BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
<S> <C> <C>
Financing activities:
Net increase in savings accounts and
demand deposits 2,090 6,275
Net (decrease) increase in certificates
of deposit (845) 1,973
Net decrease in long-term borrowings (400) (161)
Issuance of common stock 125 -
Dividends paid (354) -
--------- ---------
Net cash (used in) provided by financing activities 616 8,087
--------- ---------
Net (decrease) increase in cash and cash equivalents (1,265) 3,292
Cash and cash equivalents at the beginning
of the period 22,215 18,923
--------- ---------
Cash and cash equivalents at the end of the period $ 20,950 $ 22,215
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 3,305 $ 2,680
--------- ---------
--------- ---------
Cash paid during the period for taxes $ 993 $ 604
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
Unrealized holding gain (loss) on investment securities,
net of $1 and $74 tax effect, respectively $ 2 $ (115)
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
CITY BANKSHARES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 1994
<S> <C> <C>
Common stock:
Balance at beginning of period (889,650 shares) $ 890 $ 890
Issuance of common stock (12,500 shares) 12 -
--------- ---------
Balance at end of period (902,150 and 889,650
shares, respectively) 902 890
--------- ---------
Capital surplus:
Balance at beginning of period 8,002 8,002
Issuance of common stock 112 -
--------- ---------
Balance at end of period 8,114 8,002
--------- ---------
Retained earnings:
Balance at beginning of period 4,172 2,912
Net income 1,494 1,260
Dividend paid ($.40 per common share) (354) -
--------- ---------
Balance at end of period 5,312 4,172
--------- ---------
Unrealized holding gain (loss) on investment securities, net 2 (115)
--------- ---------
Loan to ESOP:
Balance at beginning of period (0 and 13,000 shares,
respectively) - (117)
Net payments on ESOP loan (0 and 13,000 shares,
respectively) - 117
--------- ---------
Balance at end of period (0 shares) - -
--------- ---------
Treasury stock:
Balance at beginning and end of period (5,000 shares) (5) (5)
--------- ---------
Total stockholders' equity $ 14,325 $ 12,944
--------- ---------
--------- ---------
</TABLE>
10
<PAGE>
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
City Bankshares, Inc. ("Bankshares") was incorporated in Oklahoma in June
1985 for the purpose of becoming a bank holding company. The accounting and
reporting policies of Bankshares and its wholly-owned subsidiary City Bank
and Trust (the "Company") conform to generally accepted accounting principles
and general practice within the banking industry.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
In September 1995, Bankshares entered into an agreement in which all the
outstanding stock of Bankshares would be acquired. Under the terms of the
agreement, C-Teq, Inc. would be spun-off to the shareholders of Bankshares
prior to the acquisition. The acquisition is subject to regulatory approval
and is expected to be completed in early 1996.
The following represent the more significant policies and practices.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Bankshares and
the following subsidiaries: City Bank and Trust, C-Teq, Inc. and C-Teq,
Inc.'s subsidiary, Versateq, Inc.
All significant intercompany accounts and transactions have been eliminated.
INVESTMENT SECURITIES
Effective January 1, 1994, Bankshares prospectively adopted the Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("FAS 115"). Under FAS 115, the Bankshares'
marketable securities are classified as either available-for-sale or as
held-to-maturity. Investments which are classified as available-for-sale are
recorded at current market value, with an offsetting adjustment to
stockholders' equity. Investments which are classified as held to maturity
are carried at cost, adjusted for amortization of premium and accretion of
discount on a basis that approximates the interest method. Gains or losses
on the disposition of investment securities are recognized based upon the
adjusted cost of the specific securities sold. Bankshares' policy is to hold
its investment securities to maturity and does not engage in trading
activities. The effect of adoption of this statement did not have a material
effect on the Bankshares' consolidated financial position.
LOANS
Loans are stated at the principal amount outstanding, net of unearned
discount. Interest income on installment loans is recognized using the
interest method. Interest on other loans is recognized based on the
principal amount of loans outstanding. A loan is placed on non-accrual
status when, in the opinion of management, the future collectibility of
interest and principal is in doubt. Interest income on these loans is only
recognized to the extent payments are received.
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The allowance for possible loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the allowance for
possible loan losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management believes
will be adequate to absorb possible loan losses on existing loans that may
become uncollectible, based on evaluations of the collectibility of loans.
The evaluations take into consideration such factors as changes in the nature
and volume of the portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrowers'
ability to pay.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the depreciable assets. The estimated useful lives range
from three to thirty-five years. Maintenance and repairs are charged to
expense as incurred, while improvements are capitalized. When assets are
retired or otherwise disposed of, the cost and applicable accumulated
depreciation are removed from the respective accounts and any resulting gain
or loss is reflected in operations.
11
<PAGE>
INTANGIBLE ASSETS
Intangible assets consist of core deposits intangible, data processing
contracts, a non-compete agreement and excess cost over net assets of
acquired subsidiaries. Core deposit intangible and excess cost over net
assets of acquired subsidiaries are amortized on a straight-line basis over
15 years. Data processing contracts are amortized under the straight-line
method over the estimated life of the related contracts, which ranges from 3
to 10 years. The non-compete agreement is amortized using the straight-line
method over 5 years.
OTHER REAL ESTATE AND REPOSSESSED ASSETS
Other real estate and repossessed assets are included in other assets and are
comprised of real property and other miscellaneous assets acquired through
foreclosure proceedings or acceptance of a deed in lieu of foreclosure. These
assets are carried at the lower of the recorded investment in the loan or
fair value based on appraised value. Losses arising from acquisition of such
assets are charged against the allowance for possible loan losses. Other real
estate and repossessed assets approximated $1,069 at December 31, 1995 and
$1,694 at December 31, 1994.
DATA PROCESSING INCOME
Check and data processing income is recognized as the services are performed.
INCOME TAXES
Bankshares and its subsidiaries file a consolidated tax return. Beginning
January 1, 1993, the Company adopted the Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109") and applied the
provisions prospectively in 1993.
The adoption of FAS 109 changes the Company's method of accounting for income
taxes from the deferred method (APB 11) to an asset and liability method.
Previously, the Company has provided deferred income taxes to reflect the
effect of certain items of income and expense which are recognized for
financial reporting purposes in a time period which differs from the period
in which they are recognized for federal income taxes purposes. The asset
and liability method requires the recognition of deferred taxes for the
expected future tax consequences of temporary differences between tax bases
and financial reporting bases of assets and liabilities.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers cash and
due from banks, interest bearing deposits with banks and federal funds sold
as cash equivalents.
RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform with 1995 presentation.
12
<PAGE>
2. RESTRICTIONS ON DUE FROM FEDERAL RESERVE
The Company is required, as a matter of law, to maintain an average reserve
balance with the Federal Reserve Bank. The average amount of reserve
balances for the years ended December 31, 1995 and 1994 was approximately
$1,366 and $1,270, respectively.
3.INVESTMENT SECURITIES
The amortized cost and estimated market values of investments in debt
securities are as follows:
HELD-TO-MATURITY DECEMBER 31, 1995
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $36,838 $79 $(1,327) $35,590
Mortgage-backed securities 73 73
Other debt securities 861 (10) 851
------- --- ------- -------
Totals $37,772 $79 $(1,337) $36,514
------- --- ------- -------
------- --- ------- -------
AVAILABLE FOR SALE DECEMBER 31, 1995
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $1,573 $10 $ (7) $ 1,576
------- --- ------- ------
------- --- ------- ------
An unrealized holding gain on investment securities of $2, net of $1 tax
effect and $(115), net of $74 tax effect at December 31, 1995 and 1994,
respectively, is reflected in a separate component of stockholders' equity.
13
<PAGE>
HELD-TO-MATURITY DECEMBER 31, 1994
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $37,667 $ 6 $(2,990) $34,683
Mortgage-backed securities 820 (33) 787
Other debt securities 1,194 (26) 1,168
------- ---- ------- -------
Totals $39,681 $ 6 $(3,049) $36,638
------- ---- ------- -------
------- ---- ------- -------
AVAILABLE FOR SALE DECEMBER 31, 1994
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 6,811 $ -- $ (189) $ 6,622
------- ---- ------- -------
------- ---- ------- -------
14
<PAGE>
The amortized cost and estimated market value of debt securities at
December 31, 1995, by contractual maturities, are shown below.
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
ESTIMATED
AMORTIZED MARKET
Held-To-Maturity COST VALUE
--------- --------
Due in one year or less $ 3,963 $ 3,964
Due after one year, through five years 12,456 11,311
Due after five years, through ten years 3,410 3,359
Due after ten years 17,870 17,807
------- -------
37,699 36,441
Mortgage-backed securities 73 73
------- -------
$37,772 $36,514
------- -------
------- -------
ESTIMATED
AMORTIZED MARKET
Available-For-Sale COST VALUE
------- -------
Due in one year or less $ -- $ --
Due after one year, through five years -- --
Due after five years, through ten years 43 45
Due after ten years 1,530 1,531
------- -------
$1,573 $ 1,576
------- -------
------- -------
Although the stated final maturities are within the time frames
stated, the estimated actual life may be shorter. Investment
securities having a book value of $35,853 and $27,708 at December
31, 1995 and 1994, respectively, were pledged to secure public
funds on deposit and for other purposes as required or permitted by
law.
4. LOANS
The following is a schedule of loans outstanding, by category:
DECEMBER 31,
1995 1994
---- ----
Commercial, financial and other $ 64,571 $ 51,715
Real estate mortgage - personal 8,628 9,930
Installment 5,925 5,303
-------- --------
Total loans 79,124 66,948
Unearned discount (51) (12)
-------- --------
Loans, net of unearned discount 79,073 66,936
Allowance for possible loan losses (793) (740)
-------- --------
Loans, net $ 78,280 $ 66,196
-------- --------
-------- --------
Loans on which the accrual of interest has been discontinued or
reduced amounted to $26 at December 31, 1995 and $157 at December 31,
1994.
15
<PAGE>
Certain of Bankshares' officers, directors and stockholders had
transactions with the Company in the ordinary course of business.
In the opinion of management, such transactions were made on
substantially the same terms as those prevailing at the time for
comparable transactions with unrelated parties and did not involve
more than a normal amount of risk. Loan transactions with
officers, directors, principal stockholders and their affiliated
interests are as follows:
YEAR ENDED DECEMBER 31,
1995 1994
---- ----
Balance at beginning of year $ 4,953 $ 3,817
Additions 17,566 9,921
Amounts collected (17,843) (8,785)
--------- --------
Balance at end of year $ 4,676 $ 4,953
--------- --------
--------- --------
Interest income attributable to related party loans amounted to
$383 and $337 during 1995 and 1994, respectively. Changes in the
allowance for possible loan losses are summarized below:
YEAR ENDED DECEMBER 31,
1995 1994
---- ----
Balance at beginning of year $ 740 $ 824
Provisions 75 22
Recoveries 25 12
Loans charged off (47) (118)
------- --------
Balance at end of year $ 793 $ 740
------- --------
------- --------
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" ("FAS 114"), was issued in May 1993.
This new accounting standard requires that impaired loans be measured
based upon the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if
the loan is collateral dependent. A loan is impaired when, based on
current information and events, it is probable that all amounts due
according the contractual terms of the loan agreement will not be
collected. Bankshares adopted FAS 114 in January 1995. The adoption of
FAS 114 did not have a material effect on the financial position or
results of operation of the Company.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company is party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
their customers. The financial instruments include commitments to
advance funds on existing credit facilities and standby letters of
credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
statement of financial position. The contractual amounts of these
instruments reflect the extent of involvement the Company has in
particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to advance
funds on existing credit facilities and standby letters of credit is
represented by the contractual amounts of the instruments. Management
uses the same credit policies in making these commitments as they do for
on-balance sheet instruments.
Commitments to advance funds on existing credit facilities are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. These commitments have fixed
expiration dates or other termination clauses and may require payment of
a fee. At December 31, 1995, the Company's total unfunded commitments
to extend credit on existing facilities amounted to $18,227. Management
evaluates each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if deemed necessary by management,
upon extension of credit is based on management's evaluation of the
customer. Collateral held varies but may include accounts receivable,
inventory, marketable securities, fixed assets and real estate.
Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party and
total $998 at December 31, 1995. The credit risk involved in issuing
letters of credit is essentially the
16
<PAGE>
same as that involved in extending loan facilities to customers.
Collateral held varies but may include accounts receivable, inventory,
marketable securities, fixed assets and real estate. Since most of the
letters of credit are expected to expire without being drawn upon, they
do not necessarily represent future cash requirements.
6. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
The Company's principal area of business is the Oklahoma City metro area
and, as a result, at December 31, 1995, the loan portfolio contained
concentrations of credit risk with borrowers located in this area.
7. PREMISES AND EQUIPMENT
The following is a summary of premises and equipment, by category:
DECEMBER 31,
1995 1994
---- ----
Land $ 1,067 $ 1,067
Buildings 1,998 1,998
Furniture, fixtures and equipment 9,670 9,177
------- -------
12,735 12,242
Accumulated depreciation (7,299) (6,200)
------- -------
$ 5,436 $ 6,042
------- -------
------- -------
Depreciation expense was $1,099 and $1,016 for years ended December 31,
1995 and 1994, respectively.
8. INTANGIBLE ASSETS
Intangible assets are summarized as follows:
DECEMBER 31,
1995 1994
---- ----
Core deposit $ 2,399 $ 2,399
Data processing contracts 1,089 1,089
Non-compete agreement 250 250
Excess cost over net assets of acquired
subsidiaries 704 704
------- -------
4,442 4,442
Accumulated amortization (3,192) (2,847)
------- -------
$ 1,250 $ 1,595
------- -------
------- -------
Amortization expense amounted to $345 and $377 in 1995 and
1994, respectively.
9. TIME DEPOSITS
Certificates of deposit in denominations of $100 or more
amounted to $13,471 and $14,624 at December 31, 1995 and
1994, respectively.
10. LONG-TERM BORROWINGS
Information related to long-term borrowings is summarized as
follows:
DECEMBER 31,
1995 1994
---- ----
Term loan agreement $ 1,400 $ 1,800
------- -------
------- -------
Bankshares has a $2,000 term loan with Boatmen's First
National Bank of Oklahoma (Boatmen's). The terms of the
loan provide for interest equal to Boatmen's corporate base
rate plus 1/4% fixed annually at the note's anniversary date
(8.75%
17
<PAGE>
at December 31, 1995). The term loan is due December
31, 2003, with semi-annual principal payments of $100, plus
accrued interest quarterly. The indebtedness is secured by
all of the outstanding capital stock of City Bank and Trust
and Bankshares' interest in the outstanding stock of C-Teq.
The terms of the agreement contain certain provisions
regarding maintenance of minimum capital ratios at the
Company level.
Amounts due on long-term borrowings in each of the next five
years are as follows:
1996 $ 200
1997 200
1998 200
1999 200
2000 & Thereafter 600
-------
$ 1,400
-------
-------
11. INCOME TAXES
The provision for income taxes consist of the following:
YEAR ENDED DECEMBER 31,
1995 1994
---- ----
Current tax expense:
Federal $ 871 $ 615
State 95 56
------ -----
Total current 966 671
------ -----
Deferred tax expense:
Federal 43 46
State 7 7
------ -----
Total deferred 50 53
------ -----
Total income tax expense $1,016 $ 724
------ -----
------ -----
18
<PAGE>
The income tax provision for 1995 differs from the expected corporate income
tax rate primarily as a result of permanent differences in the determination
of pre-tax and taxable income. The majority of the permanent differences are
attributable to amortization of intangibles.
The deferred tax asset under FAS 109 is comprised of the following:
DECEMBER 31,
1995 1994
---- ----
Loan loss reserve $ 90 $ 57
Other real estate owned 240 405
Unrealized holding loss on investment securities 74
---- ----
Gross deferred tax asset 330 536
---- ----
Premises and equipment 303 365
Intangible assets 47 65
Unrealized holding gain on investment securities 1
---- ----
Gross deferred tax liability 351 430
---- ----
Deferred tax asset (liability), net $(21) $106
---- ----
---- ----
A reconciliation of tax expense at the federal statutory tax rate applied to
income before taxes follows:
YEAR ENDED DECEMBER 31,
1995 1994
---- ----
Tax expense at the federal statutory tax rate $ 869 $675
(Increase) decrease in tax expense from:
Excess cost amortization 39 56
State tax expense, net of federal tax benefit 95 38
Other, net 13 (45)
------ ----
Total tax expense $1,016 $724
------ ----
------ ----
19
<PAGE>
12. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
The following condensed financial statements are for City Bankshares, Inc.
only:
BALANCE SHEET
DECEMBER 31,
1995 1994
---- ----
ASSETS
Cash and temporary investments $ 121 $ 277
Investment in subsidiaries; at equity 15,143 13,941
Excess cost over net assets of acquired subsidiaries 369 392
Current tax asset, net 58 101
Other assets 37 37
------- -------
$15,728 $14,748
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Long-term borrowings $ 1,400 $ 1,800
Other liabilities 3 4
Stockholders' equity 14,325 12,944
------- -------
$15,728 $14,748
------- -------
------- -------
STATEMENT OF INCOME
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994
---- ----
Operating income:
Dividends from subsidiaries $ 550 $ --
Interest 7 18
------- -------
Total operating income 557 18
------- -------
Operating expense:
Interest 145 126
Other 75 38
------- -------
Total operating expense 220 164
------- -------
Income (loss) before income tax benefit and
equity in undistributed earnings of subsidiaries 337 (146)
Allocated income tax benefit 71 48
------- -------
Income (loss) before equity in undistributed
earnings of subsidiaries 408 (98)
Undistributed earnings of subsidiaries 1,086 1,358
------- -------
Net income $1,494 $1,260
------- -------
------- -------
20
<PAGE>
12. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 31,
1995 1994
---- ----
Operating activities:
Net income $ 1,494 $ 1,260
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 23 23
Change in current taxes 43 (33)
Equity in earnings of subsidiaries (1,636) (1,358)
Other, net (1) (13)
------- -------
Net cash used in operating activities (77) (121)
Investing activities:
Issuance of common stock 125 --
Dividends received 550 --
------- -------
Net cash provided by investing activities 675 --
------- -------
Financing activities:
Dividends paid (354) --
Principal payments on long-term debt (400) (44)
------- -------
Net cash used in financing activities (754) (44)
------- -------
Net decrease in cash and cash equivalents (156) (165)
Cash and cash equivalents at the beginning of
the year 277 442
------- -------
Cash and cash equivalents at the end of the year $ 121 $ 277
------- -------
------- -------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 145 $ 139
------- -------
------- -------
Cash paid during the year for income taxes $ 993 $ 604
------- -------
------- -------
21
<PAGE>
13. EMPLOYEE AND OTHER BENEFITS
In September, 1985, Bankshares adopted the City Bankshares, Inc. Employee
Stock Ownership Plan ("Plan") effective October 1, 1985. The Plan covers all
eligible employees, as defined in the Plan, of Bankshares and its subsidiaries.
The participants are not permitted to contribute to the Plan, and the annual
contribution to the Plan by the Bankshares is at the discretion of the Board
of Directors. The aggregate amount of cash contributions to the Plan for the
years ending December 31, 1995 and 1994 were approximately $0 and $168,
respectively.
Bankshares also adopted the City Bankshares, Inc. Stock Option Plan ("Option
Plan") in December, 1985. The Option Plan authorizes the Board of Directors
to grant incentive stock options ("the Options") for up to a maximum of 200,000
shares of Bankshares' common stock. The Options are exercisable six months
after the date of the grant and expire 10 years after the date of the grant
if unexercised. The exercise price of the Options approximated the fair market
value of the stock at the date of the grant.
During 1990, Bankshares adopted the City Bankshares, Inc. Directors Stock
Option Plan ("Directors Option Plan"). The Directors Option Plan is intended
to further the interests of Bankshares by providing recognition to its outside
directors for their time, effort and participation. Each outside director
shall be granted 5,000 shares, and shall become vested with respect to the
options at 20% for each year of service. The Directors Option Plan provides
that a maximum of 50,000 may be exercised pursuant to the Directors Option
Plan at any time after issuance for up to 10 years.
A summary of stock option transactions follows:
SHARES UNDER OPTION
-------------------
OPTION
PRICE
STOCK OPTION PLANS DIRECTORS INCENTIVE RANGE
- ------------------ --------- --------- ------
Outstanding at December 31, 1993 32,000 141,350 $10.00 to
$10.62
Granted 3,000 $10.39
Canceled 500 $10.62
-------- --------- -----------
Outstanding at December 31, 1994 35,000 140,850 $10.00 to
$10.62
Granted 2,000 $10.39
-------- --------- -----------
Exercised 12,500 $10.00
Outstanding at December 31, 1995 37,000 128,350 $10.00 to
$10.62
-------- --------- -----------
-------- --------- -----------
C-Teq, Inc. has outstanding incentive stock options to certain officers and
directors. Holders of these incentive options are entitled to purchase 109
of the outstanding shares of C-Teq, Inc. (representing approximately 15% of
the company). Such options are exercisable at $1,200 per share on or before
December 18, 1999.
In October 1991, Bankshares adopted the Savings Incentive Plan for City
Bankshares, Inc. ("401k Plan"). As defined in the 401(k) Plan, all eligible
employees may participate. Bankshares contributed a total of $97 and $52 in
1995 and 1994, respectively, in contributions.
22
<PAGE>
14. COMMITMENTS AND CONTINGENCIES
The Company leases equipment and office space under cancelable and
non-cancelable operating leases. Future minimum lease commitments relating
to operating leases which have remaining terms in excess of one year at
December 31, 1995, are as follows:
1996 $ 587
1997 563
1998 547
1999 493
2000 467
Thereafter 715
Total rental expense, including rental on cancelable and non-cancelable
leases, amounted to approximately $708 and $718 for the periods ending
December 31, 1995 and 1994 respectively.
15. FAIR VALUES OF FINANCIAL INSTRUMENTS
The fair values reported below for financial instruments are based on a
variety of factors. In some cases, fair values represent quoted market
prices for identical or comparable instruments. In other cases, fair values
have been estimated based on assumptions concerning the amount and timing of
estimated future cash flow and assumed discount rates reflecting varying
degrees of risk. Accordingly, the fair values may not represent actual
values of the financial instruments that could have been realized as of year
end or that will be realized in the future.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments:
CASH AND DUE FROM BANKS; FEDERAL FUNDS SOLD
The carrying amount of these short-term instruments is a reasonable estimate
of fair value.
SECURITIES
For securities, 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.
LOANS
For certain homogenous categories of loans, such as some residential
mortgages, fair value is estimated using the quoted market prices for
securities backed by similar loans, adjusted for differences in loan
characteristics. For residential mortgage loans held for sale, guaranteed
student loans and participations in pools of credit card receivables, the
carrying amount is a reasonable estimate of fair value. The fair value of
other types of loans is 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.
DEPOSIT LIABILITIES
The fair value of transaction and savings accounts is the amount payable on
demand at the reporting date. The fair value of fixed-maturity certificates
of deposit is estimated using the rates currently offered for deposits of
similar remaining maturities.
23
<PAGE>
LONG-TERM BORROWINGS
The amount payable on the note payable is a reasonable estimate of its fair
value.
LOAN COMMITMENTS AND LETTER OF CREDIT
The fair value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the terms of the agreements.
The fair value of letters of credit is based on fees currently charged for
similar agreements.
The estimated fair values of Bankshares' financial instruments are as follows:
DECEMBER 31,
1995
CARRYING FAIR
AMOUNT VALUE
---------- ---------
FINANCIAL ASSETS
Cash and due from banks $ 11,182 $ 11,182
Federal funds sold 9,750 9,750
Securities 39,348 38,090
Loans:
Loans (net of unearned interest) 79,073
Allowance for possible loan losses (793)
---------- ---------
Loans, net 78,280 78,279
FINANCIAL LIABILITIES
Deposits 132,992 132,802
Long-term borrowings 1,400 1,400
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments 86
Letters of credit 5
24
<PAGE>
BANCFIRST CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
For the Year Ended December 31, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
CITY
BANCFIRST BANCFIRST PRO FORMA BANCFIRST
HISTORICAL HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks. . . . . . . . . . . . . . $ 85,353 $ 11,200 $ (63) (a) $ 100,336
3,846 (h)
Securities . . . . . . . . . . . . . . . . . . . . 263,113 9,348 (1,258) (i) 301,203
Federal funds sold . . . . . . . . . . . . . . . . 30,085 9,750 1,711 (b) 15,925
(1,400) (d)
(19,125) (e)
(1,250) (g)
(3,846) (h)
Loans:
Total loans (net of unearned interest) . . . . . 625,162 79,073 1,613 (j) 705,848
Allowance for possible loan losses . . . . . . . (10,646) (793) 1,613 (11,439)
----------- ---------- ---------- -----------
Loans, net . . . . . . . . . . . . . . . . . . 614,516 78,280 694,409
Premises and equipment, net. . . . . . . . . . . . 28,308 5,436 (564) (a) 32,931
1,364 (k)
(1,613) (j)
Other real estate owned. . . . . . . . . . . . . . 781 1,070 1,851
Intangible assets, net . . . . . . . . . . . . . . 8,106 1,250 (286) (a) 15,339
6,269 (l)
Accrued interest receivable. . . . . . . . . . . . 10,403 730 11,133
Other assets . . . . . . . . . . . . . . . . . . . 7,673 2,645 (2,105) (a) 9,463
1,250 (g)
----------- ---------- ---------- -----------
Total assets . . . . . . . . . . . . . . . . . $ 1,048,338 $ 149,709 $ (15,457) $ 1,182,590
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing. . . . . . . . . . . . . . . $ 196,597 $ 45,747 $ 541 (a) $ 242,885
Interest-bearing . . . . . . . . . . . . . . . . 726,572 87,245 813,817
----------- ---------- ---------- -----------
Total deposits . . . . . . . . . . . . . . . . 923,169 132,992 541 1,056,702
Short-term borrowings. . . . . . . . . . . . . . . 18,705 -- 18,705
Long-term borrowings . . . . . . . . . . . . . . . 918 1,400 (1,400) (d) 918
Accrued interest payable . . . . . . . . . . . . . 3,237 289 3,526
Other liabilities. . . . . . . . . . . . . . . . . 3,966 703 (273) (a) 4,396
----------- ---------- ---------- -----------
Total liabilities. . . . . . . . . . . . . . . . 949,995 135,384 (1,132) 1,084,247
----------- ---------- ---------- -----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . 6,225 902 165 (b) 6,225
(1,067) (f)
Capital surplus. . . . . . . . . . . . . . . . . 34,769 8,114 1,546 (b) 34,769
(9,660) (f)
Retained earnings. . . . . . . . . . . . . . . . 55,792 5,312 (3,286) (a) 55,792
250 (c)
(2,276) (f)
Unrealized securities gains, . . . . . . . . . . 1,557 2 (2) (f) 1,557
Treasury stock . . . . . . . . . . . . . . . . . -- (5) 5 (f) --
----------- ---------- ---------- -----------
Total stockholders' equity . . . . . . . . . . 98,343 14,325 (14,325) 98,343
----------- ---------- ---------- -----------
Total liabilities and stockholders' equity . . $ 1,048,338 $ 149,709 $ (15,457) $ 1,182,590
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
consolidated condensed financial statements.
25
<PAGE>
BANCFIRST CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
CITY BANCFIRST
BANCFIRST BANKSHARES PRO FORMA PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees . . . . . . . $ 57,914 $ 6,999 $ 161 (p) $ 65,074
Investment securities . . . . . . . 14,538 2,464 229 (r) 17,231
Federal funds sold and other . . . 1,687 222 (1,404)(o) 505
---------- --------- -------- ---------
Total interest income . . . . . 74,139 9,685 (1,014) 82,810
---------- --------- -------- ---------
INTEREST EXPENSE
Deposits . . . . . . . . . . . . . 30,167 3,201 33,368
Short-term borrowings . . . . . . . 253 39 292
Line of credit . . . . . . . . . . 16 -- 16
Long-term borrowings . . . . . . . 14 145 (145)(n) 14
---------- --------- -------- ---------
Total interest expense . . . . 30,450 3,385 (145) 33,690
---------- --------- -------- ---------
Net interest income . . . . . . . . 43,689 6,300 (869) 49,120
Provision for possible loan
losses . . . . . . . . . . . . . . 855 75 930
---------- --------- -------- ---------
Net interest income after
provision for possible loan
losses . . . . . . . . . . . . 42,834 6,225 (869) 48,190
---------- --------- -------- ---------
NONINTEREST INCOME
Service charges on deposits . . . . 7,869 1,059 8,928
Securities transactions . . . . . . 111 -- 111
Other . . . . . . . . . . . . . . . 4,520 9,463 (8,235)(m) 4,865
(883)(q)
---------- --------- -------- ---------
Total noninterest income. . . . 12,500 10,522 (9,118) 13,904
---------- --------- -------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits. . . 19,909 7,213 (4,216)(m) 22,906
Occupancy and fixed assets
expense, net . . . . . . . . . . . 2,049 851 (363)(m) 2,537
Depreciation . . . . . . . . . . . 1,871 1,094 (134)(m) 2,122
(712)(q)
3 (t)
Amortization . . . . . . . . . . . 1,453 345 (128)(m) 2,240
570 (s)
Other . . . . . . . . . . . . . . . 9,650 4,734 (3,820)(m) 10,877
313 (u)
---------- --------- -------- ---------
Total noninterest expense . . . 34,932 14,237 (8,487) 40,682
---------- --------- -------- ---------
Income before taxes . . . . . . . . 20,402 2,510 (1,500) 21,412
Income tax expense . . . . . . . . (7,563) (1,016) 210 (m) 7,757
600 (v)
12 (w)
---------- --------- -------- ---------
Net income . . . . . . . . . . $ 12,839 $ 1,494 $ (678) $ 13,655
---------- --------- -------- ---------
---------- --------- -------- ---------
PER SHARE DATA (PRIMARY AND FULLY DILUTED)
Net income . . . . . . . . . . . . $ 2.01 $ 1.61 $ 2.14
---------- --------- ---------
---------- --------- ---------
Average common shares and common
stock equivalents outstanding. . . 6,391,424 926,148 6,391,424
---------- --------- ---------
---------- --------- ---------
</TABLE>
See accompanying notes to unaudited pro forma
consolidated condensed financial statements.
26
<PAGE>
BANCFIRST CORPORATION
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The unaudited pro forma consolidated condensed financial statements for the
year ended December 31, 1995 are based upon BancFirst Corporation's and City
Bankshares, Inc.'s ("City Bankshares") audited financial statements. The pro
forma consolidated condensed balance sheet is presented as if the merger
occurred at December 31, 1995. The pro forma consolidated condensed
statement of income is presented as if the merger occurred at January 1,
1995. Other assumptions and the pro forma adjustments are described below.
(2) PRO FORMA ADJUSTMENTS
The pro forma consolidated condensed balance sheet reflects the following
adjustments:
(a) Reflect the spin-off of C-Teq, Inc. to the shareholders
of City Bankshares prior to the acquisition.
(b) Reflect the exercise of stock options by City Bankshares'
officers and directors prior to the acquisition.
(c) Reflect the assumption that the minimum level of $13 million
in total stockholders' equity, as required by the terms of the
acquisition, had been attained by City Bankshares as of September 30,
1995.
(d) Reflect the pay-off of City Bankshares' term loan prior to the
acquisition.
(e) Record the cash payment for the common stock of City
Bankshares.
(f) Eliminate stockholders' equity of City Bankshares.
(g) Record the payment to the C.E.O. of City Bankshares for an
agreement not to compete.
(h) Reflect the increase in reserve requirements due to loss of
City Bankshares' low reserve tranche.
(i) Write-down City Bankshares' securities held for investment to
market value.
(j) Record loan to C-Teq, Inc. for purchase of furniture,
equipment and software leased from City Bankshares.
(k) Write-up City Bankshares' premises to fair value.
(l) Record core deposit intangible and excess of cost over fair
value of the net assets acquired.
The pro forma consolidated condensed statements of income reflect
the following adjustments:
(m) Reflect the spin-off of C-Teq, Inc. to shareholders of City
Bankshares, Inc. prior to the acquisition.
(n) Eliminate the interest expense on City Bankshares' term loan.
(o) Reduce interest income on short-term investments to reflect
the use of such funds for the various purposes assumed for the City
Bankshares acqusition in the pro forma consolidated condensed
balance sheet.
(p) Increase interest income for loan to C-Teq, Inc. for purchase
of furiture, equipment and software.
(q) Reduce depreciation expense and eliminate rental income for
furniture, equipment and software purchased by C-Teq, Inc.
27
<PAGE>
(r) Record accretion of discount from write-down of City
Bankshares' securities held for investment to market value.
(s) Record amortization of core deposit intangible and excess of
cost over fair value of the net assets acquired.
(t) Adjust depreciation expense for write up of City Bankshares'
premises to fair value.
(u) Record amortization of payment for agreement not to compete.
(v) Reduce income tax expense for effect of pro forma adjustments.
(w) Adjust City Bankshares' income tax expense to statutory rate.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
June 5, 1996 /Randy P. Foraker/
----------------------------------------
Randy P. Foraker
Sr. Vice President, Controller
and Secretary/Treasurer
(Principal Accounting Officer)
29
