<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________________to_________________
Commission File Number 0-14384
BANCFIRST CORPORATION
(Exact name of registrant as specified in charter)
Oklahoma 73-1221379
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 N. Broadway, Suite 200, Oklahoma City, Oklahoma
73102-8401
(Address of principal executive offices)
(Zip Code)
(405) 270-1086
(Registrant's telephone number, including area code)
--------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___.
---
As of April 30, 1999 there were 9,323,513 shares of the registrant's Common
Stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------------------------------
1999 1998 1998
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 120,216 $ 130,776 $ 132,286
Interest-bearing deposits with banks 20 148 11
Securities (market value: $552,883 and $609,262, respectively) 551,598 607,100 582,649
Federal funds sold 159,600 51,077 187,369
Loans:
Total loans (net of unearned interest) 1,350,230 1,306,119 1,338,879
Allowance for possible loan losses (20,380) (17,963) (19,659)
----------- ----------- -----------
Loans, net 1,329,850 1,288,156 1,319,220
Premises and equipment, net 47,553 47,887 47,558
Other real estate owned 1,244 1,052 1,057
Intangible assets, net 23,589 28,678 24,095
Accrued interest receivable 20,994 19,903 19,589
Other assets 24,397 20,849 22,049
----------- ----------- -----------
Total assets $ 2,279,061 $ 2,195,626 $ 2,335,883
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 415,792 $ 383,495 $ 463,391
Interest-bearing 1,559,445 1,546,221 1,561,409
----------- ----------- -----------
Total deposits 1,975,237 1,929,716 2,024,800
Short-term borrowings 39,612 25,374 54,841
Long-term borrowings 17,278 10,025 12,966
9.65% Capital Securities 25,000 25,000 25,000
Accrued interest payable 8,037 8,653 8,315
Other liabilities 10,365 10,106 8,044
----------- ----------- -----------
Total liabilities 2,075,529 2,008,874 2,133,966
----------- ----------- -----------
Commitments and contingent liabilities
Stockholders' equity:
Common stock, $1.00 par (shares issued: 9,321,295 and 9,631,254,
respectively) 9,321 9,632 9,292
Capital surplus 45,657 44,376 45,148
Retained earnings 145,985 135,992 142,046
Accumulated other comprehensive income 2,569 2,029 5,431
Treasury stock, at cost (355,060 shares in 1998) -- (5,277) --
----------- ----------- -----------
Total stockholders' equity 203,532 186,752 201,917
----------- ----------- -----------
Total liabilities and stockholders' equity $ 2,279,061 $ 2,195,626 $ 2,335,883
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------------
1999 1998
---------------- ----------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 29,768 $ 29,559
Interest-bearing deposits with banks -- 3
Securities:
Taxable 7,787 7,511
Tax-exempt 551 662
Federal funds sold 1,724 847
-------------- -------------
Total interest income 39,830 38,582
-------------- -------------
INTEREST EXPENSE
Deposits 15,192 15,131
Short-term borrowings 658 428
Long-term borrowings 227 132
9.65% Capital Securities 612 614
-------------- -------------
Total interest expense 16,689 16,305
-------------- -------------
Net interest income 23,141 22,277
Provision for possible loan losses 937 789
Net interest income after provision
for possible loan losses 22,204 21,488
-------------- -------------
NONINTEREST INCOME
Service charges on deposits 3,830 3,350
Securities transactions 1 --
Other 4,039 2,428
-------------- -------------
Total noninterest income 7,870 5,778
-------------- -------------
NONINTEREST EXPENSE
Salaries and employee benefits 11,398 10,454
Occupancy and fixed assets expense, net 1,156 1,119
Depreciation 1,244 1,130
Amortization 864 749
Data processing services 572 570
Net expense from other real estate owned 21 30
Other 4,761 4,323
-------------- -------------
Total noninterest expense 20,016 18,375
-------------- -------------
Income before taxes 10,058 8,891
Income tax expense (3,836) (3,296)
-------------- -------------
Net income 6,222 5,595
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities (2,862) 241
-------------- -------------
Comprehensive income $ 3,360 $ 5,836
============== =============
NET INCOME PER COMMON SHARE
Basic $ 0.67 $ 0.60
============== =============
Diluted $ 0.66 $ 0.59
============== =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 8,021 $ 7,472
INVESTING ACTIVITIES ---------- ----------
Net cash and due from banks provided by (used for) acquisitions and divestitures (12,116) 93,486
Purchases of securities:
Held for investment (24,575) (102,064)
Available for sale (9,951) (22,018)
Maturities of securities:
Held for investment 25,719 3,538
Available for sale 35,421 11,224
Proceeds from sales of securities:
Held for investment 155 6,912
Available for sale -- 6,231
Net (increase) decrease in federal funds sold 27,769 9,300
Purchases of loans (11,037) (3,934)
Proceeds from sales of loans 41,710 21,667
Net other increase in loans (45,669) (44,125)
Purchases of premises and equipment (2,374) (1,454)
Proceeds from the sale of other real estate owned and repossessed assets 850 699
Other, net 773 87
--------- ----------
Net cash used for investing activities 26,675 (20,451)
--------- ----------
FINANCING ACTIVITIES
Net increase (decrease) in demand, transaction and savings deposits (39,795) 6,660
Net increase in certificates of deposits 5,776 30,528
Net increase (decrease) in short-term borrowings (15,229) (357)
Net increase in long-term borrowings 4,312 2,974
Issuance of common stock 549 419
Acquisition of common stock (1,067) --
Cash dividends paid (1,302) (886)
--------- ----------
Net cash provided by financing activities (46,756) 39,338
--------- ----------
Net increase (decrease) in cash and due from banks (12,060) 26,359
Cash and due from banks at the beginning of the period 132,296 104,565
--------- ----------
Cash and due from banks at the end of the period $ 120,236 $ 130,924
========= ==========
SUPPLEMENTAL DISCLOSURE
Cash paid during the year for interest $ 16,967 $ 15,659
========= ==========
Cash paid during the year for income taxes $ 146 $ 212
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BANCFIRST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
(1) GENERAL
The accompanying consolidated financial statements include the accounts of
BancFirst Corporation, BFC Capital Trust I, BancFirst and its subsidiaries
BancFirst Investment Corporation, Lenders Collection Corporation and Express
Financial Corporation (formerly National Express Corporation). All significant
intercompany accounts and transactions have been eliminated. Assets held in a
fiduciary or agency capacity are not assets of the Company and, accordingly, are
not included in the consolidated financial statements.
The unaudited interim financial statements contained herein reflect all
adjustments which are, in the opinion of management, necessary to provide a fair
statement of the financial position and results of operations of the Company for
the interim periods presented. All such adjustments are of a normal and
recurring nature. There have been no significant changes in the accounting
policies of the Company since December 31, 1998, the date of the most recent
annual report. Certain amounts in the 1998 financial statements have been
reclassified to conform to the 1999 presentation.
As discussed in note (2), the Company completed mergers with Lawton
Security Bancshares, Inc. ("Lawton Security Bancshares") in May 1998, and
AmQuest Financial Corp ("AmQuest") in October 1998. The mergers were accounted
for as a poolings of interests. Accordingly, the consolidated financial
information for periods prior to the mergers has been restated to combine the
consolidated accounts of Lawton Security Bancshares and AmQuest with the
consolidated accounts of the Company for all periods presented.
The preparation of financial statements in conformity with generally
accepted accounting principles inherently involves the use of estimates and
assumptions that affect the amounts reported in the financial statements and the
related disclosures. Such estimates and assumptions may change over time and
actual amounts may differ from those reported.
(2) MERGERS, ACQUISITIONS AND DISPOSALS
In March 1998, BancFirst completed the purchase of 13 branches from
NationsBank, N.A. and concurrently sold three of the branches to another
Oklahoma financial institution. The purchase and sale resulted in BancFirst
purchasing loans and other assets of approximately $32,800, assuming deposits of
approximately $132,100 and paying a premium on deposits of approximately $9,100.
The transaction was accounted for as a purchase. Accordingly, the effects of
the purchase are included in the Company's consolidated financial statements
from the date of the purchase forward. BancFirst subsequently sold an
additional four of the branches during 1998. These branches had loans and other
assets of approximately $2,500, and deposits of approximately $54,000. These
transactions did not have a material effect on the results of operations of the
Company for 1998.
In May 1998, the Company completed a merger with Lawton Security
Bancshares, Inc. ("Lawton Security Bancshares"), which had approximately $92,000
in total assets. The merger was effected through the exchange of 414,790 shares
of BancFirst Corporation common stock for all of the Lawton Security Bancshares
common stock outstanding, and was accounted for as a pooling of interests.
Accordingly, the consolidated accounts of Lawton Security Bancshares have been
combined with the accounts of the Company and are included in the Company's
consolidated financial statements for all periods presented.
5
<PAGE>
In October 1998, the Company completed a merger with AmQuest Financial
Corp. ("AmQuest") of Duncan, Oklahoma, which had approximately $526,000 in total
assets. The merger was effected through the exchange of 2,522,594 shares of
BancFirst Corporation common stock for all of the AmQuest common stock
outstanding, and was accounted for as a pooling of interests. Accordingly, the
consolidated accounts of AmQuest have been combined with the accounts of the
Company and are included in the Company's consolidated financial statements for
all periods presented. The Company recorded estimated restructuring charges of
$1,912 upon consummation of the merger in October 1998. These charges consist of
termination benefits of $345 for 37 employees terminated and $1,567 for loss on
facilities and other assets to be sold or abandoned. Other merger and conversion
related expenses estimated at $1,200 were incurred. Additionally, the Company
restated AmQuest's allowance for possible loan losses to conform to its own
methodology; accordingly, the allowance for possible loan losses was increased
by $1,400, which was applied retroactively to prior periods.
In December 1998, the Company completed the acquisition of Kingfisher
Bancorp, Inc. which had total assets of approximately $91,000. The acquisition
was for cash of $12,000 and was accounted for as a purchase. Accordingly, the
effects of the acquisition are included in the Company's consolidated financial
statements from the date of the acquisition forward. A core deposit intangible
of $286 and goodwill of $1,871 were recorded in the acquisition. The acquisition
did not have a material effect on the results of operations of the Company for
1998.
In February 1999, the Company sold the previously mentioned Anadarko,
Oklahoma branch, which had deposits of approximately $15,500. The sale resulted
in a pretax gain of approximately $900.
(3) RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those financial
instruments at fair value. The accounting for changes in the fair value of a
derivative instrument depends on the intended use of the derivative and its
resulting designation. The Statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company does not expect that
the adoption of this standard will have a material impact on its consolidated
financial statements.
In October 1998, the FASB issued Statement of Financial Accounting Standards
No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise." This Statement amends Statement of Financial Accounting Standards
No. 65, "Accounting for Certain Mortgage Banking Activities" to require that
after the securitization of Mortgage loans held for sale, an entity engaged in
mortgage banking activities classify the resulting mortgage-backed securities or
other retained interests based on its ability and intent to sell or hold those
investments. The Statement is effective for the first fiscal quarter beginning
after December 15, 1998. The Company does not engage in securitization
activities. Consequently, the Company does not expect that the adoption of this
standard will have a material impact on its consolidated financial statements.
6
<PAGE>
(4) SECURITIES
The table below summarizes securities held for investment and securities
available for sale.
<TABLE>
<CAPTION>
MARCH 31,
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
Held for investment at cost (market value; $117,509 and
$155,219, respectively) $ 116,224 $ 153,057
Available for sale, at market value 435,374 454,043
--------- ---------
Total $ 551,598 $ 607,100
========= =========
</TABLE>
(5) COMPREHENSIVE INCOME
The only component of comprehensive income reported by the Company is the
unrealized gain or loss on securities available for sale. The amount of this
unrealized gain or loss, net of tax, has been presented in the statement of
income for each period as a component of other comprehensive income. Below is a
summary of the tax effects of this unrealized gain or loss.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Unrealized gain (loss) during the period:
Before-tax amount $ (4,292) $ 1,063
Tax (expense) benefit 1,430 (822)
--------- ---------
Net-of-tax amount $ (2,862) $ 241
========= =========
</TABLE>
The amount of unrealized gain or loss included in accumulated other
comprehensive income is summarized below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1999 1998
-------- ----------
<S> <C> <C>
Unrealized gain (loss) on securities:
Beginning balance $ 5,431 $ 1,788
Current period change (2,862) 241
-------- ---------
Ending balance $ 2,569 $ 2,029
======== =========
</TABLE>
7
<PAGE>
(6) NET INCOME PER COMMON SHARE
Basic and diluted net income per common share are calculated as follows:
<TABLE>
<CAPTION>
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------------ ----------------- -------------
<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1999
- ---------------------------------
BASIC
Income available to common stockholders $ 6,222 9,311,351 $ 0.67
==========
Effect of stock options -- 127,158
-------------- ------------
DILUTED $ 6,222 9,438,509 $ 0.66
============== ============ ==========
Income available to common stockholders
plus assumed exercises of stock options
THREE MONTHS ENDED MARCH 31, 1998
- ---------------------------------
BASIC
Income available to common stockholders $ 5,595 9,261,543 $ 0.60
==========
Effect of stock options -- 261,936
-------------- ------------
DILUTED
Income available to common stockholders
plus assumed exercises of stock options $ 5,595 9,523,479 $ 0.59
============== ============ ==========
</TABLE>
Below is the number and average exercise prices of options that were excluded
from the computation of diluted net income per share for each period because the
options' exercise prices were greater than the average market price of the
common shares.
<TABLE>
<CAPTION>
AVERAGE
EXERCISE
SHARES PRICE
---------- ------------
<S> <C> <C>
Three Months Ended March 31, 1999 118,950 $ 36.21
Three Months Ended March 31, 1998 10,000 $ 40.00
</TABLE>
(7) TENDER OFFER
On May 3, 1999, the Company commenced a Dutch Auction self-tender offer for
a minimum of 100,000 shares, up to 1,000,000 shares, of its common stock,
representing approximately 10.73% of the total shares outstanding. The tender
offer price range is from $34.00 to $38.00 per share. Shareholders may specify
the number of shares and prices within the tender offer price range at which
they are willing to tender their shares. The Company will determine the final
purchase price that will enable it to purchase up to the maximum number of
shares from those shareholders who agreed to sell shares at or below the
purchase price. All shares purchased will be purchased at the final price. If
more than 1,000,000 shares are tendered at or below the purchase price, the
excess will be prorated among those shareholders whose shares are being
purchased. Cash on hand and a borrowing under a newly established $12 million
revolving line of credit will be used by the Company to pay for the purchase of
the stock.
(8) SEGMENT INFORMATION
The Company evaluates its performance with an internal profitability
measurement system that measures the profitability of its business units on a
pre-tax basis. The four principal business units were metropolitan banks,
community banks, other financial services, and executive, operations and
support. Metropolitan and community banks offer traditional banking products
such as commercial and retail lending, and a full line of deposit accounts.
Metropolitan banks consist of banking locations in the metropolitan Oklahoma
City and Tulsa areas. Community banks consist of banking locations in
communities throughout Oklahoma. Other financial services are specialty product
business units including guaranteed small
8
<PAGE>
business lending, guaranteed student lending, residential mortgage lending,
trust services, correspondent banking and electronic banking. The executive,
operations and support groups represent executive management, operational
support and corporate functions that are not allocated to the other business
units. The results of operations and selected financial information for the four
business units are as follows:
<TABLE>
<CAPTION>
Other Executive,
Metropolitan Community Financial Operations
Banks Banks Services & Support Eliminations Consolidated
-------------- --------------- -------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1999
Net interest income $ 5,400 $ 16,872 $ 1,229 $ (360) $ -- $ 23,141
(expense)
Noninterest income 1,100 4,637 1,463 7,123 (6,453) 7,870
Income before taxes 2,390 9,461 706 3,845 (6,344) 10,058
Total Assets 536,336 1,657,453 104,659 199,590 (218,977) 2,279,061
March 31, 1998
Net interest income $ 4,676 $ 16,958 $ 747 $ (81) $ (23) $ 22,277
(expense)
Noninterest income 804 3,603 1,201 6,941 (6,771) 5,778
Income before taxes 1,804 8,669 681 4,326 (6,589) 8,891
Total Assets 450,066 1,696,086 99,381 160,662 (210,569) 2,195,626
</TABLE>
The financial information for each business unit is presented on the basis
used internally by management to evaluate performance and allocate resources.
The Company utilizes a transfer pricing system to allocate the benefit or cost
of funds provided or used by the various business units. Certain services
provided by the support group to other business units, such as item processing,
are allocated at rates approximating the cost of providing the services.
Eliminations are adjustments to consolidate the business units and companies.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
BANCFIRST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
The Company reported net income of $6.22 million for the quarter ended
March 31, 1999, compared to net income of $5.60 million for the same quarter of
1998. Diluted net income per share was $0.66 for the first quarter of 1999,
compared to $0.59 per share for the first quarter of 1998.
Total assets were $2.28 billion, a decrease of $56.8 million from December
31, 1998, but an increase $83.4 million from March 31, 1998. The increase in
total assets at year-end 1998 was partly due to the inflow of temporary
deposits. The asset growth compared to the first quarter of 1998 was due
primarily to the acquisition of Kingfisher Bancorp, Inc. ("Kingfisher Bancorp")
in December 1998. Stockholders' equity rose to $204 million, an increase of
$1.62 million compared to December 31, 1998 and $16.8 million compared to March
31, 1998, primarily due to net earnings retained.
RESULTS OF OPERATIONS
Net interest income increased compared to the first quarter of 1998
$864,000, primarily as a result of earning asset growth. Average net earning
assets increased $45.6 million, or 13%, compared to the first quarter of 1998,
while net interest spread was 3.79% for the quarter, compared to 4.10% for the
first quarter of 1998. Net interest margin on a taxable equivalent basis was
4.61% for the first quarter of 1998, compared to 4.89% for the same quarter of
1998. The lower net interest spread and net interest margin are the result of
lower interest rates, a flatter yield curve and competitive pricing pressures on
loans.
The Company provided $937,000 for possible loan losses for the quarter,
compared to $789,000 for the first quarter of 1998, reflecting loan growth and
slightly higher net charge-offs in 1999. Net loan charge-offs were $216,000 for
the first quarter of 1999, compared to $575,000 for the first quarter of 1998.
The net charge-offs represent an annualized rate of only 0.06% of total loans
for the first quarter of 1999 and 0.18% of total loans for the first quarter of
1998.
Noninterest income increased $2.09 million, or 36.21%, compared to the
first quarter of 1998 due various factors. The acquisition of Kingfisher Bancorp
added approximately $125,000 in noninterest income. Service charges on deposits
and other income, such as trust fees and income from the origination and sale of
residential mortgages grew because of growth in volumes. In addition, the
Company sold a branch in Anadarko, Oklahoma and recognized a gain of $890,000.
Noninterest expense increased $1.64 million, or 8.93%, due to operating expenses
of acquired branches and internal growth.
Income tax expense increased $540,000 compared to the first quarter of 1998
mainly due to the higher pretax income. The effective tax rate on income before
taxes was 38.1%, up from 37.1% in 1998.
FINANCIAL POSITION
Total securities decreased $31.5 million compared to December 31, 1998 and
$55.5 million compared to March 31, 1998. The size of the Company's securities
portfolio is a function of liquidity management and excess funds available for
investment. The Company has maintained a very liquid securities portfolio to
provide funds for loan growth. At year-end 1998 and at March 31, 1999, the
Company had higher levels of federal funds sold than in the past, reflecting an
increased liquidity position. This, combined with changes in funding from
deposits and use of funds for loan growth, resulted in the decreases in the
securities portfolio. The net unrealized gain on securities available for sale
was $3.96 million at the end of the first quarter of 1999, compared to a gain of
$8.25 million at December 31, 1998 and a gain of $3.85 million at March 31,
1998. The average taxable equivalent yield on the securities portfolio for the
first quarter decreased to 6.20% from 6.48% for the same quarter of 1998.
Total loans increased $11.4 million from December 31, 1998 and $44.1
million from March 31, 1998, due to approximately $50 million of loans acquired
with Kingfisher Bancorp. The allowance for possible loan losses increased
10
<PAGE>
$721,000 from year-end 1998 and $2,417 million from the first quarter of 1998.
The allowance as a percentage of total loans was 1.51%, 1.47% and 1.38% at March
31, 1999, December 31, 1998 and March 31, 1998, respectively. The allowance to
nonperforming and restructured loans ratios at the same dates were 181.08%,
158.69% and 225.72%, respectively.
Nonperforming and restructured assets totaled $12.7 million, compared to
$14 million at year-end 1998 and $9.46 million at March 31, 1998. Although the
ratio of nonperforming and restructured assets to total assets is only 0.56%, it
is reasonable to expect nonperforming loans and loan losses to rise over time to
historical norms as a result of economic and credit cycles.
Total deposits decreased $49.6 million as compared to December 31, 1998 and
increased $45.5 million compared to March 31, 1997. The increase compared to
the first quarter of 1998 is the net result of the acquisition of Kingfisher
Bancorp, which added approximately $76 million in deposits, the sale of
approximately $70 million of deposits that were sold with former NationsBank
branches and the Anadarko branch, and internal growth. The Company's deposit
base continues to be comprised substantially of core deposits, with large
denomination certificates of deposit being only 11.8% of total deposits at March
31, 1999.
Short-term borrowings decreased $15.2 million from December 31, 1998 and
increased $14.2 million from March 31, 1998. Fluctuations in short-term
borrowings are a function of federal funds purchased from correspondent banks,
customer demand for repurchase agreements and liquidity needs of the bank. The
bank has increased its correspondent banking business over the past year. At
year-end 1998, federal funds purchased from correspondent banks were higher than
at either March 31, 1999 or 1998.
Long-term borrowings increased $4.31 million from year-end 1998 and $7.25
million from the first quarter of 1998 due to additional Federal Home Loan Bank
borrowings. The Company uses these borrowings primarily to match-fund longer-
term fixed-rate loans.
Stockholders' equity rose to $204 million from $202 million at year-end
1998 and $187 million at March 31, 1998. These increases are the result of
accumulated earnings and changes in the net unrealized gain on securities
available for sale. Average stockholders' equity to average assets for the
quarter was 9.13%, compared to 8.99% for the same quarter of 1998. The Company's
leverage ratio and total risk-based capital ratio were 8.97% and 15.87%,
respectively, at March 31, 1999, well in excess of the regulatory minimums.
On May 3, 1999, the Company commenced a Dutch Auction self-tender offer for
a minimum of 100,000 shares, up to 1,000,000 shares, of its common stock,
representing approximately 10.73% of the total shares outstanding. The tender
offer price range is from $34.00 to $38.00 per share. Shareholders may specify
the number of shares and prices within the tender offer price range at which
they are willing to tender their shares. The Company will determine the final
purchase price that will enable it to purchase up to the maximum number of
shares from those shareholders who agreed to sell shares at or below the
purchase price. All shares purchased will be purchased at the final price. If
more than 1,000,000 shares are tendered at or below the purchase price, the
excess will be prorated among those shareholders whose shares are being
purchased. Cash on hand and a borrowing under a newly established $12 million
revolving line of credit will be used by the Company to pay for the purchase of
the stock.
YEAR 2000 EXPOSURE
Many computer systems and devices using embedded computer chips currently
in operation worldwide use only two digits to specify the year. There is a
significant risk that these systems and devices could produce inaccurate
results, or may not function properly, beginning January 1, 2000 when two-digit
year numbers could be processed as being in the previous century. The Company is
exposed to the risk that not only the systems and devices it uses will
malfunction, but also those of its customers, suppliers and other parties with
whom it conducts business. Such malfunctions could expose the Company to losses
from operational errors and failures, as well as customer claims, lawsuits and
regulatory penalties for noncompliance. While the extent of these possible
losses can not be estimated, such losses could have a material adverse effect on
the Company's results of operations, liquidity and financial condition.
During 1997, the Company commenced a Year 2000 Project to conduct a
comprehensive review of its outside data
11
<PAGE>
processing services, internal computer systems and other mechanical and
computerized equipment. The purpose of the project is to determine and plan for
necessary changes to assure that its systems and equipment will function
properly in the year 2000. The project also includes communications with other
parties to determine the extent to which the parties are addressing the issue
and the exposure to the Company in the event the parties fail to adequately plan
for and resolve the issue.
The plan developed by the Company consists of the following five phases:
1. Awareness
2. Assessment
3. Renovation
4. Validation
5. Implementation
All five phases of the plan have been completed. Testing of mission
critical applications was completed in March 1999. An evaluation of Year 2000
credit risk has been completed. Contingency plans have been prepared for each
mission critical application.
The total cost of addressing the Year 2000 issue is not estimated to be
material. The Company's core business applications are provided by a data
processing company that has devoted substantial resources to assuring that the
applications sere certified as Year 2000 compliant by the end of 1998. Certain
of the other systems either have been replaced, or were already going to be
replaced with newer technology, and their replacement is not being accelerated
due the Year 2000 issue. Also, no significant information technology projects
are being deferred because of the Year 2000 issue.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See Note (3) of the Notes to Consolidated Financial Statements for a
discussion of recently issued accounting pronouncements.
SEGMENT INFORMATION
See note (8) of the Notes to Consolidated Financial Statements for
disclosures regarding the Company's operating business segments.
FORWARD LOOKING STATEMENTS
The Company may make forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) with respect to earnings,
credit quality, year 2000 compliance, corporate objectives, interest rates and
other financial and business matters. The Company cautions readers that these
forward-looking statements are subject to numerous assumptions, risks and
uncertainties, including economic conditions, the performance of financial
markets and interest rates; legislative and regulatory actions and reforms;
competition; as well as other factors, all of which change over time. Actual
results may differ materially from forward-looking statements.
12
<PAGE>
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL STATISTICS
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
PERFORMANCE STATISTICS 1999 1998
---------- ---------
<S> <C> <C>
Net income per share - basic $ 0.67 $ 0.60
Net income per share - diluted 0.07 0.59
Cash dividends per share 0.14 0.12
Return on average assets 1.10 % 1.10 %
Return on average stockholders' equity 12.04 12.23
Efficiency ratio 64.54 65.50
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET AND ASSET QUALITY MARCH 31, DECEMBER 31,
STATISTICS 1999 1998 1998
-------- -------- --------------
<S> <C> <C> <C>
Book value per share $ 21.84 $ 20.13 $ 21.73
Tangible book value per share 19.31 17.04 19.14
Average loans to deposits (year-to-date) 67.94 % 70.63 % 68.83 %
Nonperforming and restructured assets to total assets 0.56 0.43 0.60
Allowance for possible loan losses to total loans 1.51 1.38 1.47
Allowance for possible loan losses to nonperforming
and restructured loans 181.08 225.72 158.69
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED AVERAGE BALANCE SHEETS THREE MONTHS ENDED MARCH 31,
--------------------------------------------------
AND INTEREST MARGIN ANALYSIS 1999 1998
----------------------- -----------------------
TAXABLE EQUIVALENT BASIS AVERAGE AVERAGE AVERAGE AVERAGE
Earning assets: BALANCE YIELD/RATE BALANCE YIELD/RATE
<S> <C> <C> <C> <C>
Loans $ 1,343,169 9.01 % $ 1,268,466 9.44 %
Securities 568,017 6.20 533,090 6.48
Federal funds sold 144,294 4.84 56,190 5.76
----------- -----------
Total earning assets 2,055,480 7.94 1,857,746 8.48
----------- -----------
Nonearning assets:
Cash and due from banks 131,734 112,863
Interest receivable and other assets 128,638 109,440
Allowance for possible loan losses (19,859) (17,620)
----------- -----------
Total nonearning assets 240,513 204,683
----------- -----------
Total assets $ 2,295,993 $ 2,062,429
----------- -----------
Interest-bearing liabilities
Interest-bearing deposits $ 1,564,414 4.01 % $ 1,440,339 4.24 %
Short-term borrowings 52,978 5.01 31,431 5.46
Long-term borrowings 16,060 5.72 9,570 5.56
9.65% Capital Securities 25,000 9.92 25,000 9.96
----------- -----------
Total interest-bearing liabilities 1,658,452 4.15 1,506,340 4.37
----------- -----------
Interest-free funds:
Noninterest-bearing deposits 412,597 355,550
Interest payable and other liabilities 15,425 15,059
Stockholders' equity 209,519 185,480
Total interest-free funds 637,541 556,089
----------- -----------
Total liabilities and stockholders' equity $ 2,295,993 $ 2,062,429
=========== ===========
Net interest spread 3.79 % 4.10 %
Net interest margin 4.61 % 4.89 %
======= =======
</TABLE>
13
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no significant changes in the Registrants disclosures
regarding market risk since December 31, 1998, the date of its annual report to
stockholders.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
On February 25, 1999, the Board of Directors of the Company declared a
dividend of one preferred stock purchase right (a "Right" or "Rights") for each
outstanding share of common stock, par value $1.00 per share ("Common Stock"),
of the Company outstanding as of the close of business on February 25, 1999 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company one one-hundredth (1/100) of a share of Series A referred Stock, par
value $.01 per share, of the Company (the "Preferred Stock") at a purchase price
of $110, subject to adjustment (the "Purchase Price"). The description and
terms of the Rights are set forth in the Rights Agreement, which was filed as
Exhibit 1 to the Company's Current Report on Form 8-K dated February 25, 1999.
Initially, ownership of the Rights will be evidenced by the Common Stock
certificates representing shares then-outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common
Stock and a "Distribution Date" will occur on the close of business on the
earlier of (i) the tenth day following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person"), with certain
exceptions set forth below, has acquired beneficial ownership of 15% or more of
the voting power of all securities of the Company then outstanding generally
entitled to vote for the election of directors ("Voting Power"), or such earlier
date as a majority of the Board of Directors shall become aware of the existence
of an Acquiring Person (the "Stock Acquisition Date") and (ii) the tenth
business day after the date of the commencement or announcement of a person's or
group's intention to commence a tender or exchange offer the consummation of
which would result in the ownership of 15% or more of the Voting Power (even if
no shares are actually purchased pursuant to such offer). Until the
Distribution Date, (i) the Rights will not be exercisable, (ii) certificates
will not be sent to shareowners, (iii) the Rights will be evidenced by the
Common Stock certificates, (iv) the Rights will automatically trade with the
Common Stock, (v) the Rights will be transferred with and only with such Common
Stock certificates, (vi) new Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference, and (vii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
Even if they have acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the Voting Power of the Company, each of the
following persons (an "Exempt Person") will not be deemed to be an Acquiring
Person: (i) the Company, any subsidiary of the Company, any employee benefit
plan or employee stock plan of the Company or any subsidiary of the Company;
(ii) any person who becomes an Acquiring Person solely by virtue of a reduction
in the number of outstanding shares of Common Stock, unless and until such
person shall become the beneficial owner of, or make a tender offer for any
additional shares of Common Stock; and (iii) any individual, corporation,
partnership or other person, entity or group which "beneficially owned" on
February 25, 1999, 15% or more of the outstanding Common Stock of the
Corporation.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on February 25, 2009, unless earlier redeemed or
exchanged by the Company.
Except in the circumstances described below, after the Distribution Date,
each Right will entitle the holder of record to purchase from the Company one
one-hundredth of a share of Preferred Stock at a price of $110. Each such
fraction of a share of Preferred Stock carries voting and dividend rights that
are intended to produce the equivalent of one share of Common Stock. The voting
and dividend rights of the Preferred Stock are subject to adjustment in the
event of dividends, subdivisions and combinations with respect to the Common
Stock of the Company. In lieu of issuing certificates for Preferred Stock which
are less than an integral multiple of one share of Preferred Stock (i.e., 100
preferred share fractions), the Company may pay cash representing the current
market value of the preferred share fractions.
In the event (i) any person (other than an Exempt Person, as described in
the Rights Agreement) becomes an Acquiring Person (except pursuant to an offer
for all outstanding shares of Common Stock that the independent directors
determine
14
<PAGE>
prior to the time such offer is made to be fair to and otherwise in the best
interest of the Company and its shareowners) or (ii) any Exempt Person (as
defined in the Rights Agreement) who is the beneficial owner of 15% or more of
the outstanding Voting Power of the Company fails to continue to qualify as an
Exempt Person, then each holder of record of a Right, other than the Acquiring
Person, will thereafter have the right to receive, upon payment of the Purchase
Price, Common Stock (or, in certain circumstances, cash, property or other
securities of the Company) having a market value at the time of the transaction
equal to twice the Purchase Price. Rights are not exercisable following such
event, however, until such time as the Rights are no longer redeemable by the
Company as set forth below. Any Rights that are or were at any time, on or after
the Distribution Date, beneficially owned by an Acquiring Person shall become
null and void.
At any time after any person becomes an Acquiring Person, the Board of
Directors may, at its option, exchange all or part of the outstanding Rights
(other than Rights held by the Acquiring Person and certain related parties) for
shares of Common Stock at an exchange ratio of one share of Common Stock per
Right (subject to certain anti-dilution adjustments). The Board may not effect
such an exchange, however, at any time any person or group owns 50% or more of
the Voting Power of the Company. Immediately after the Board orders such an
exchange, the right to exercise the Rights shall terminate and the holders of
Rights shall thereafter only be entitled to receive shares of Common Stock at
the applicable exchange ratio.
At any time until the earlier of (i) ten days after the Stock Acquisition
Date (subject to extension by the Board of Directors) or (ii) the date the
Rights are exchanged pursuant to the Rights Agreement, the Company may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company authorizing redemption of the Rights, the right to exercise the
Rights will terminate, and the only right of the holders of Rights will be to
receive the Redemption Price without any interest thereon.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group who attempts to acquire the Company on
terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board
since they may be redeemed by the Company at $0.01 per Right at any time until
the close of business on the tenth day (or such later date as described above)
after a person or group has obtained beneficial ownership of 15% or more of the
voting stock.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
EXHIBIT
NUMBER EXHIBIT
----------- --------------------------------------------------------------
2.1 Purchase and Assumption Agreement between NationsBank, N.A.
and BancFirst dated September 26, 1997 (filed as exhibit 2.4
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997 and incorporated herein by
reference).
2.2 Merger Agreement dated May 6, 1998 between BancFirst
Corporation and AmQuest Financial Corp. (filed as Exhibit 2.2
to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 and incorporated herein by reference).
3.1 Second Amended and Restated Certificate of Incorporation
(filed as Exhibit 1 to the Company's Form 8-A/A filed July 23,
1998 and incorporated herein by reference
3.2 Certificate of Designations of Preferred Stock (filed as
Exhibit 3.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998 and incorporated
herein by reference).
3.3 Amended By-Laws (filed as Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1992 and incorporated herein by reference).
4.1 Amended and Restated Declaration of Trust of BFC Capital Trust
I dated as of February 4, 1997 (filed as Exhibit 4.1 to the
Company's Current Report on Form 8-K dated February 4, 1997
and incorporated herein by reference.)
15
<PAGE>
4.2 Indenture dated as of February 4, 1997 (filed as Exhibit 4.2
to the Company's Current Report on Form 8-K dated February 4,
1997 and incorporated herein by reference.)
4.3 Series A Capital Securities Guarantee Agreement dated as of
Feburary 4, 1997 (filed as Exhibit 4.3 to the Company's
Current Report on Form 8-K dated Feburary 4, 1997 and
incorporated herein by reference)
4.4 Rights Agreement, dated as of February 25, 1999, between
BancFirst Corporation and BancFirst, as Rights Agent,
including as Exhibit A the form of Certificate of Designations
of the Company setting forth the terms of the Preferred Stock,
as Exhibit B the form of Right Certificate and as Exhibit C
the form of Summary of Rights Agreement (filed as Exhibit 1 to
the Company's Current Report on Form 8-K dated February 25,
1999 and incorporated herein by reference).
27.1* Financial Data Schedule for the three months ended March 31,
1999.
27.2* Financial Data Schedule for the three months ended March 31,
1998.
-------------------------------------------------------------------------------
*Filed herewith
(b) The following report on Form 8-K has been filed by the Company during
the quarter ended March 31, 1999.
<TABLE>
<CAPTION>
Date of
Report Items Reported
--------- ----------------------------------------------------------------------------
<S> <C>
February 25, 1999 Adoption of Rights Agreement, dated as of February 25, 1999.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANCFIRST CORPORATION
---------------------
(Registrant)
Date May 24, 1999 /s/ Randy P. Foraker
------------ --------------------------------------------
(Signature)
Randy P. Foraker
Senior Vice President and Controller;
Assistant Secretary/Treasurer
(Principal Accounting Officer)
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND IS QUALIFIED IN ITS ENTIRETRY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 120,216
<INT-BEARING-DEPOSITS> 20
<FED-FUNDS-SOLD> 159,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 435,374
<INVESTMENTS-CARRYING> 116,224
<INVESTMENTS-MARKET> 117,509
<LOANS> 1,350,230
<ALLOWANCE> 20,380
<TOTAL-ASSETS> 2,279,061
<DEPOSITS> 1,975,237
<SHORT-TERM> 39,612
<LIABILITIES-OTHER> 18,402
<LONG-TERM> 42,278
0
0
<COMMON> 9,321
<OTHER-SE> 194,211
<TOTAL-LIABILITIES-AND-EQUITY> 2,279,061
<INTEREST-LOAN> 29,768
<INTEREST-INVEST> 8,338
<INTEREST-OTHER> 1,724
<INTEREST-TOTAL> 39,830
<INTEREST-DEPOSIT> 15,192
<INTEREST-EXPENSE> 16,689
<INTEREST-INCOME-NET> 23,141
<LOAN-LOSSES> 937
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 20,016
<INCOME-PRETAX> 10,058
<INCOME-PRE-EXTRAORDINARY> 6,222
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,222
<EPS-BASIC> 0.67
<EPS-DILUTED> 0.66
<YIELD-ACTUAL> 4.57
<LOANS-NON> 8,405
<LOANS-PAST> 1,689
<LOANS-TROUBLED> 1,162
<LOANS-PROBLEM> 32,796
<ALLOWANCE-OPEN> 19,659
<CHARGE-OFFS> 526
<RECOVERIES> 310
<ALLOWANCE-CLOSE> 20,380
<ALLOWANCE-DOMESTIC> 20,380
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,137
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS OF THE REGISTRANT FOR THE THREE MONTHS ENDED MARCH 31, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-10-1998
<PERIOD-END> MAR-31-1998
<CASH> 130,776
<INT-BEARING-DEPOSITS> 148
<FED-FUNDS-SOLD> 51,077
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 454,043
<INVESTMENTS-CARRYING> 153,057
<INVESTMENTS-MARKET> 155,219
<LOANS> 1,306,199
<ALLOWANCE> 17,963
<TOTAL-ASSETS> 2,195,626
<DEPOSITS> 1,929,716
<SHORT-TERM> 25,374
<LIABILITIES-OTHER> 18,759
<LONG-TERM> 35,025
0
0
<COMMON> 9,632
<OTHER-SE> 177,120
<TOTAL-LIABILITIES-AND-EQUITY> 2,195,626
<INTEREST-LOAN> 29,559
<INTEREST-INVEST> 8,173
<INTEREST-OTHER> 850
<INTEREST-TOTAL> 38,582
<INTEREST-DEPOSIT> 15,131
<INTEREST-EXPENSE> 16,305
<INTEREST-INCOME-NET> 22,277
<LOAN-LOSSES> 789
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 18,375
<INCOME-PRETAX> 8,891
<INCOME-PRE-EXTRAORDINARY> 5,595
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,595
<EPS-BASIC> 0.60
<EPS-DILUTED> 0.59
<YIELD-ACTUAL> 4.86
<LOANS-NON> 5,732
<LOANS-PAST> 1,803
<LOANS-TROUBLED> 423
<LOANS-PROBLEM> 24,496
<ALLOWANCE-OPEN> 17,458
<CHARGE-OFFS> 813
<RECOVERIES> 238
<ALLOWANCE-CLOSE> 17,963
<ALLOWANCE-DOMESTIC> 17,963
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,024
</TABLE>
