<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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, 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 October 31, 2000 there were 8,321,768 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>
SEPTEMBER 30,
---------------------------- DECEMBER 31,
2000 1999 1999
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 120,253 $ 105,006 $ 126,691
Interest-bearing deposits with banks 1,477 189 1,715
Federal funds sold 15,700 63,000 51,666
Securities (market value: $565,021, $564,712 and $595,509,
respectively) 565,609 565,438 596,715
Loans:
Total loans (net of unearned interest) 1,566,445 1,364,179 1,455,481
Allowance for loan losses (24,076) (20,173) (22,548)
---------- ---------- ----------
Loans, net 1,542,369 1,344,006 1,432,933
Premises and equipment, net 54,172 49,087 52,467
Other real estate owned 2,184 1,099 1,612
Intangible assets, net 21,748 22,243 24,087
Accrued interest receivable 21,795 20,662 20,771
Other assets 31,160 25,266 27,150
---------- ---------- ----------
Total assets $2,376,467 $2,195,996 $2,335,807
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 491,207 $ 421,886 $ 460,131
Interest-bearing 1,598,665 1,524,623 1,622,565
---------- ---------- ----------
Total deposits 2,089,872 1,946,509 2,082,696
Short-term borrowings 37,634 20,284 22,091
Long-term borrowings 27,714 23,566 26,392
9.65% Capital Securities 25,000 25,000 25,000
Accrued interest payable 8,525 8,104 8,421
Other liabilities 7,463 7,905 6,493
---------- ---------- ----------
Total liabilities 2,196,208 2,031,368 2,171,093
========== ========== ==========
Commitments and contingent liabilities
Stockholders' equity:
Common stock, $1.00 par (shares issued: 8,073,730, 8,166,203 and 8,074 8,166 8,112
8,112,170, respectively)
Capital surplus 47,281 46,520 46,766
Retained earnings 127,029 110,754 113,344
Accumulated other comprehensive income (2,125) (812 ) (3,508)
---------- ---------- ----------
Total stockholders' equity 180,259 164,628 164,714
---------- ---------- ----------
Total liabilities and stockholders' equity $2,376,467 $2,195,996 $2,335,807
========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 37,377 $ 30,174 $ 106,266 $ 89,963
Securities:
Taxable 8,123 7,696 24,931 22,834
Tax-exempt 525 625 1,605 1,872
Federal funds sold 48 1,163 1,101 4,327
Interest-bearing deposits with banks 20 7 48 28
--------- --------- --------- ---------
Total interest income 46,093 39,665 133,951 119,024
--------- --------- --------- ---------
INTEREST EXPENSE
Deposits 18,497 15,205 53,561 45,346
Short-term borrowings 908 287 1,441 1,366
Long-term borrowings 446 339 1,290 855
9.65% Capital Securities 612 611 1,835 1,835
--------- --------- --------- ---------
Total interest expense 20,463 16,442 58,127 49,402
--------- --------- --------- ---------
Net interest income 25,630 23,223 75,824 69,622
Provision for loan losses 840 418 3,309 1,823
--------- --------- --------- ---------
Net interest income after provision
for loan losses 24,790 22,805 72,515 67,799
--------- --------- --------- ---------
NONINTEREST INCOME
Service charges on deposits 4,354 4,188 12,812 12,174
Securities transactions (1) 248 1 244
Other 3,350 2,825 9,361 9,301
--------- --------- --------- ---------
Total noninterest income 7,703 7,261 22,174 21,719
--------- --------- --------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits 12,156 11,542 36,233 34,360
Occupancy and fixed assets expense, net 1,476 1,371 4,151 3,645
Depreciation 1,273 1,195 3,825 3,599
Amortization 931 912 2,808 2,732
Data processing services 630 542 1,903 1,642
Net expense from other real estate owned 445 91 313 130
Other 5,110 4,817 15,078 14,626
--------- --------- --------- ---------
Total noninterest expense 22,021 20,470 64,311 60,734
--------- --------- --------- ---------
Income before taxes 10,472 9,596 30,378 28,784
Income tax expense (3,516) (3,566 ) (10,881) (10,664)
--------- --------- --------- ---------
Net income 6,956 6,030 19,497 18,120
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities 2,460 (1,018) 1,383 (6,243)
--------- --------- --------- ---------
Comprehensive income $ 9,416 $ 5,012 $ 20,880 $ 11,877
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic $ 0.86 $0.74 $ 2.41 $ 2.06
========= ========= ========= =========
Diluted $ 0.85 $0.73 $ 2.39 $ 2.03
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE>
BANCFIRST CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
2000 1999
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES $ 23,614 $ 22,871
-------------- ---------------
<S> <C> <C>
INVESTING ACTIVITIES
Net cash and due from banks used for acquisitions and divestitures -- (12,251)
Purchases of securities:
Held for investment (14,745) (33,370)
Available for sale (22,667) (92,136)
Maturities of securities:
Held for investment 17,895 50,576
Available for sale 51,563 81,724
Proceeds from sales of held for investment: 1,300 693
Net decrease in federal funds sold 35,966 124,369
Purchases of loans (2,354) (11,251)
Proceeds from sales of loans 101,623 120,830
Net other increase in loans (212,720) (139,851)
Purchases of premises and equipment (8,303) (7,504)
Proceeds from the sale of other real estate owned and repossessed 948 2,210
assets
Other, net 2,498 1,860
-------------- ---------------
Net cash provided (used) by investing activities (48,996) (85,899)
-------------- ---------------
FINANCING ACTIVITIES
Net increase (decrease) in demand, transaction and savings 23,916 (52,563)
deposits
Net decrease in certificates of deposits (16,740) (10,184)
Net increase (decrease) in short-term borrowings 15,543 (34,557)
Net increase in long-term borrowings 1,322 10,600
Issuance of common stock 548 1,453
Acquisition of common stock (2,000) (47,027)
Cash dividends paid (3,883) (3,593)
-------------- ---------------
Net cash used by financing activities 18,706 (135,871)
-------------- ---------------
Net decrease in cash and due from banks (6,676) (27,101)
Cash and due from banks at the beginning of the period 128,406 132,296
-------------- ---------------
Cash and due from banks at the end of the period $ 121,730 $ 105,195
============== ===============
SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest $ 58,023 $ 65,821
============== ===============
Cash paid during the period for income taxes $ 12,157 $ 9,426
============== ===============
See accompanying notes to consolidated financial statements.
</TABLE>
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, and
First State Bank for 2000 and a portion of 1999 (representing the period since
acquisition). 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, 1999, the date of the most recent
annual report. Certain amounts in the 1999 financial statements have been
reclassified to conform to the 2000 presentation.
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) 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. In June 1999, the FASB issued Statement of Financial
Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133 - an
amendment of FASB Statement No. 133." This Statement defers the effective date
of FASB Statement No. 133 to all fiscal quarters of fiscal years beginning after
June 15, 2000. The Company does not expect that the adoption of this standard
will have a material impact on its consolidated financial statements.
In September 2000, the FASB issued Statement of Financial Accounting
Standards No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities -A Replacement of FASB Statement No. 125".
This Statement is effective for transfers occurring after March 31, 2001 and for
disclosures relating to securitization transactions and collateral for fiscal
years ending after December 15, 2000. The Company does not expect the adoption
of this standard will have a material effect on its consolidated financial
statements.
(3) RECENT DEVELOPMENTS; MERGERS, ACQUISITIONS AND DISPOSALS
In February 1999, the Company sold a branch in Anadarko, Oklahoma, which
had deposits of approximately $15,500. The sale resulted in a pretax gain of
approximately $900.
In December 1999, the Company completed the purchase of certain assets and
assumption of certain liabilities of First State Bank of Oklahoma City,
Oklahoma. Under the terms of the agreement, the Company organized a new wholly-
owned bank under the First State Bank name. The new First State Bank acquired
approximately $106,000 of assets, assumed approximately $109,000 of liabilities,
and recorded $2,615 of intangible assets. The purchase and assumption 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. The acquisition did not have a material effect on the
results of the operations of the Company for 1999.
In March 2000, BancFirst Corporation became a financial holding company
under the new Gramm-Leach-Bliley financial services modernization law. This will
allow the Company to expand into new financial activities such as insurance
underwriting, securities underwriting and dealing, and mutual fund distribution.
In October 2000, BancFirst Corporation completed the acquisition of First
Southwest Corporation of Frederick,
5
<PAGE>
Oklahoma ("First Southwest") which had total assets of approximately $118,000.
All of the outstanding shares of First Southwest common stock were exchanged for
266,681 shares of BancFirst Corporation common stock and approximately $4,335 of
cash. The acquisition 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. Total intangible assets of
$4,279 were recorded for the purchase. The acquisition is not expected to have a
material effect on the results of operations of the Company for 2000.
(4) TENDER OFFER
In June 1999, the Company completed a Dutch auction issuer tender offer and
purchased 1,186,502 shares of its common stock for the maximum offer price of
$38.00 per share. Cash on hand and two borrowings totaling $7,600 were used to
pay for the purchase of the stock. The two borrowings under a $12,000 revolving
line of credit were at rates of 6.3% and 6.5%, and matured in July and October
1999.
(5) SECURITIES
The table below summarizes securities held for investment and securities
available for sale.
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------- DECEMBER 31,
2000 1999 1999
-------- -------- --------
<S> <C> <C> <C>
Held for investment at cost (market value; $90,453, $ 91,041 $103,788 $129,481
$103,062, and $128,275, respectively)
Available for sale, at market value 474,568 461,650 467,234
-------- -------- --------
Total $565,609 $565,438 $596,715
======== ======== ========
</TABLE>
(6) 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Unrealized gain (loss) during the period:
Before-tax amount $ 3,795 $ 133 $ 2,344 $ (9,543)
Tax (expense) benefit (1,335) (1,151) (961) 3,300
-------- -------- -------- --------
Net-of-tax amount $ 2,460 $ (1,018) $ 1,383 $ (6,243)
-------- -------- -------- --------
</TABLE>
The amount of unrealized gain or loss included in accumulated other
comprehensive income is summarized below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Unrealized gain (loss) on securities:
Beginning balance $ (4,585) $ 206 $ (3,508) $ 5,431
Current period change 2,460 (1,018) 1,383 (6,243)
-------- -------- -------- --------
Ending balance $ (2,125) $ (812) $ (2,125) $ (812)
======== ======== ======== ========
</TABLE>
6
<PAGE>
(7) 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 SEPTEMBER 30, 2000
-------------------------------------
BASIC
Income available to common stockholders $ 6,956 8,074,223 $ 0.86
=========
Effect of stock options -- 76,340
----------- -------------
DILUTED
Income available to common stockholders
plus assumed exercises of stock options $ 6,956 8,150,563 $ 0.85
=========== ============= =========
THREE MONTHS ENDED SEPTEMBER 30, 1999
-------------------------------------
BASIC
Income available to common stockholders $ 6,030 8,167,951 $ 0.74
=========
Effect of stock options -- 101,306
----------- -------------
DILUTED
Income available to common stockholders
plus assumed exercises of stock options $ 6,030 8,269,257 $ 0.73
=========== ============= =========
NINE MONTHS ENDED SEPTEMBER 30, 2000
-------------------------------------
BASIC
Income available to common stockholders $ 19,497 8,099,688 $ 2.41
=========
Effect of stock options -- 71,294
----------- -------------
DILUTED
Income available to common stockholders
plus assumed exercises of stock options $ 19,497 8,170,982 $ 2.39
=========== ============= =========
NINE MONTHS ENDED SEPTEMBER 30, 1999
------------------------------------
BASIC
Income available to common stockholders $ 18,120 8,808,075 $ 2.06
=========
Effect of stock options -- 113,174
----------- -------------
DILUTED
Income available to common stockholders
plus assumed exercises of stock options $ 18,120 8,921,249 $ 2.03
=========== ============= =========
</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.
AVERAGE
EXERCISE
SHARES PRICE
------- ----------
Three Months Ended September 30, 2000 234,500 $33.92
Three Months Ended September 30, 1999 125,815 $36.54
Nine Months Ended September 30, 2000 269,555 $33.58
Nine Months Ended September 30, 1999 109,214 $36.80
7
<PAGE>
(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 are 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 business lending, guaranteed student
lending, residential mortgage lending, trust services, 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 ELIMIN- CONSOL-
BANKS BANKS SERVICES & SUPPORT ATIONS IDATED
------------ ---------- -------- ---------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED:
SEPTEMBER 30, 2000
Net interest income (expense) $ 8,337 $ 17,017 $ 475 $ (199) $ -- $ 25,630
Noninterest income 1,428 4,005 1,486 15,101 (14,317) 7,703
Income before taxes 3,844 9,167 689 11,089 (14,317) 10,472
SEPTEMBER 30, 1999
Net interest income (expense) $ 6,007 $ 17,111 $ 1,037 $ (931) $ (1) $ 23,223
Noninterest income 1,175 3,789 1,569 7,524 (6,796) 7,261
Income before taxes 2,727 9,370 777 3,518 (6,796) 9,596
NINE MONTHS ENDED:
SEPTEMBER 30, 2000
Net interest income (expense) $ 24,254 $ 51,184 $ 2,351 $ (1,965) $ -- $ 75,824
Noninterest income 4,313 11,873 4,070 32,090 (30,172) 22,174
Income before taxes 9,675 29,039 1,763 20,073 (30,172) 30,378
SEPTEMBER 30, 1999
Net interest income (expense) $ 17,184 $ 50,944 $ 3,524 $ (2,021) $ (9) $ 69,622
Noninterest income 3,394 12,196 4,218 21,340 (19,429) 21,719
Income before taxes 7,571 27,878 2,136 10,495 (19,296) 28,784
TOTAL ASSETS:
September 30, 2000 $819,565 $1,598,388 $106,544 $ 371,360 $ (519,390) $2,376,467
September 30, 1999 $566,190 $1,610,299 $ 98,245 $ 111,188 $ (189,926) $2,159,107
</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 revenues
related to other financial services are allocated to the banks whose customers
receive the services and, therefor, are not reflected in the income for other
financial services. 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.
8
<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
Net income for the third quarter ended September 30, 2000 was $6.96 million,
up from $6.03 million for the third quarter of 1999. Diluted net income per
share was $0.85, up from $0.73 for the third quarter of 1999, as the combined
result of the higher earnings and a Dutch auction issuer tender offer completed
in June 1999, under which the Company repurchased 1,186,502 shares of its common
stock for $45.1 million. Net income for the first nine months of 2000 was $19.5
million, up from $18.1 million for the first nine months of 1999. Diluted net
income per share for the nine months was $2.39 and $2.03 for 2000 and 1999,
respectively.
Total assets at September 30, 2000 were $2.38 billion, up $40 million from
December 31, 1999 and $180 million from September 30, 1999. The asset growth
compared to the third quarter of 1999 was due in part to the acquisition of
First State Bank of Oklahoma City, Oklahoma in December 1999, which added
approximately $109 million of assets. Stockholders' equity was $180 million at
September 30, 2000, an increase of $15.5 million compared to December 31, 1999,
and $15.6 million compared to September 30, 1999.
In March 2000, BancFirst Corporation became a financial holding company under
the new Gramm-Leach-Bliley financial services modernization law. This will
allow the Company to expand into new financial activities such as insurance
underwriting, securities underwriting and dealing, and mutual fund distribution.
In October 2000, BancFirst Corporation completed the acquisition of First
Southwest Corporation of Frederick, Oklahoma ("First Southwest") which had total
assets of approximately $118 million. All of the outstanding shares of First
Southwest common stock were exchanged for 266,681 shares of BancFirst
Corporation common stock and approximately $4.34 million in cash. The
acquisition 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. Total intangible assets of $4.28 million
were recorded for the purchase. The acquisition is not expected to have a
material effect on the results of operations of the Company for 2000.
RESULTS OF OPERATIONS
THIRD QUARTER
Net interest income increased $2.41 million compared to the third quarter of
1999, primarily as a result of an increase in the net interest margin from 4.66%
to 4.85%. Average net earning assets increased $31.6 million compared to the
third quarter of 1999, while net interest spread increased to 3.91% from 3.88%
for the third quarter of 1999. The higher net interest spread and net interest
margin are the product of rising interest rates in late 1999 and early 2000,
loan growth, and the Company's ability to control its funding costs in the short
run. These conditions have resulted in the Company's yield on its earning
assets rising faster than the rate on its interest-bearing liabilities.
The Company provided $840,000 for loan losses in the third quarter, compared
to $418,000 for the third quarter of 1999. The higher provisions in 2000 were
due to loan growth and higher classified and nonperforming loans. Net loan
charge-offs were $1.07 million for the third quarter of 2000, compared to
$509,000 for the second quarter of 1999. The net charge-offs represent
annualized rates of only 0.27% and 0.15% of total loans for the third quarter of
2000 and 1999, respectively.
Noninterest income increased $442,000, or 6.08%, compared to the third
quarter of 1999. Noninterest expense increased $1.55 million, or 7.58%,
compared to the third quarter of 1999, which includes a $400,000 write down on a
building held for sale in the third quarter of 2000. These increases were also
due in part to the acquisition of First State
9
<PAGE>
Bank.
Income tax expense decreased $50,000 compared to the third quarter of 1999
due to $290,000 of tax benefits recorded in the third quarter of 2000 in
connection with the finalization of the Company's 1999 tax returns. The
effective tax rate on income before taxes was 33.57%, down from 37.16% in the
third quarter of 1999.
YEAR-TO-DATE
Net interest income increased $6.20 million compared to the first nine months
of 1999, primarily as a result of an increase in the net interest margin to
4.84% from 4.66%. Average net earning assets increased $2.73 million, while net
interest spread increased to 3.91% from 3.86%. The higher net interest spread
and net interest margin are the product of rising interest rates in late 1999
and early 2000, loan growth, and the Company's ability to control its funding
costs in the short run. These conditions have resulted in the Company's yield
on its earning assets rising faster than the rate on its interest-bearing
liabilities.
The Company provided $3.31 million for loan losses in the first nine months,
compared to $1.82 million for the same period of 1999. The higher provisions in
2000 were due to loan growth and higher classified and nonperforming loans. Net
loan charge-offs were only $1.78 million for the first nine months of 2000,
compared to $1.31 for the first nine months of 1999. The net charge-offs
represent annualized rates of only 0.15% and 0.13% of total loans for the first
nine months of 2000 and 1999, respectively.
Noninterest income increased only $455,000 compared to the first nine months
of 1999 due to a gain on the sale of a branch in the first quarter of 1999.
Excluding this gain, noninterest income increased $1.36 million, or 6.51%.
Noninterest expense increased $3.58 million, or 5.89%, compared to the first
nine months of 1999. These increases were due in part to the acquisition of
First State Bank.
Income tax expense increased $217,000 compared to the first nine months of
1999. The effective tax rate on income before taxes was 35.82%, compared to
37.05% for the same period of 1999.
FINANCIAL POSITION
Federal funds sold decreased $36 million from December 31, 1999 and $47.3
million from September 30, 1999. Due to loan growth exceeding deposit growth,
the Company has become a net borrower of federal funds.
Total securities decreased $31.1 million compared to December 31, 1999 and
increased $171,000 compared to September 30, 1999. 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. The main factors in the changes in
total securities were changes in funding from deposits and use of funds for loan
growth. The net unrealized loss on securities available for sale was $2.80
million at the end of the third quarter of 2000, compared to a loss of $5.14
million at December 31, 1999 and a loss of $1.29 million at September 30, 1999.
The average taxable equivalent yield on the securities portfolio for the third
quarter increased to 6.21% from 6.02% for the same quarter of 1999.
Total loans increased $111 million from December 31, 1999 and $202 million
from September 30, 1999, due to internal growth and approximately $60 million of
loans acquired from First State Bank. The allowance for loan losses increased
$1.53 million from year-end 1999 and $3.90 million from the third quarter of
1999. The allowance as a percentage of total loans was 1.54%, 1.55% and 1.48%
at September 30, 2000, December 31, 1999 and September 30, 1999, respectively.
The allowance to nonperforming and restructured loans at the same dates was
228.71%, 183.47% and 169.42%, respectively.
Nonperforming and restructured assets totaled $13.3 million at September 30,
2000, compared to $14.2 million at December 31, 1999 and $13.2 million at
September 30, 1999. 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 future
economic and credit cycles.
10
<PAGE>
Total deposits increased $7.18 million compared to December 31, 1999,
although average deposits for the quarter were $92.9 million higher than in the
fourth quarter of 1999. The increase in average deposits is the result of
internal growth and the acquisition of First State Bank, which added
approximately $109 million in deposits. Compared to September 30, 1999, total
deposits increased $143 million. The Company's deposit base continues to be
comprised substantially of core deposits, with large denomination certificates
of deposit being only 12% of total deposits at September 30, 2000.
Short-term borrowings increased $15.5 million from December 31, 1999 and
$17.4 million from September 30, 1999. 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.
Long-term borrowings increased $1.32 million from year-end 1999 and $4.15
million from the third quarter of 1999 due to additional Federal Home Loan Bank
borrowings. The Company uses these borrowings primarily to match-fund long-term
fixed-rate loans.
Stockholders' equity increased to $180 million from $165 million at both
year-end 1999 and September 30, 1999, primarily as a result of accumulated
earnings. Average stockholders' equity to average assets for the quarter was
7.45%, compared to 7.31% for the third quarter of 1999. In June 1999, the
Company repurchased 1,186,502 shares of its common stock, which reduced
stockholders' equity by $45.1 million. The Company's leverage ratio and total
risk-based capital ratio were 7.88% and 12.71%, respectively, at September 30,
2000, well in excess of the regulatory minimums.
YEAR 2000 EXPOSURE
Since January 1, 2000, the Company has tested its critical systems and the
tests have not revealed any year 2000 problems. In addition, the Company's
operations have not experienced any year 2000-related problems. The Company
will continue to analyze its systems and services that utilize date-embedded
codes that may experience operational problems as various functions are
utilized, or as other potential problem dates arrive throughout the year. The
Company will continue to communicate with third party vendors of systems
software and equipment, suppliers of telecommunications capacity and equipment,
customers and others with which it does business to coordinate year 2000
compliance.
The total cost of addressing the Year 2000 issue was not material. The
Company's core business applications are provided by a data processing company
that devoted substantial resources to assuring that the applications were
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 was not accelerated due the Year 2000
issue. Also, no significant information technology projects were deferred
because of the Year 2000 issue.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note (2) 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 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.
11
<PAGE>
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL STATISTICS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------------------
PERFORMANCE STATISTICS 2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income per share - basic $ 0.86 $ 0.74 $ 2.41 $ 2.06
Net income per share - diluted 0.85 0.73 2.39 2.03
Cash dividends per share 0.16 0.14 0.48 0.42
Return on average assets 1.16% 1.07% 1.11% 1.07%
Return on average stockholders' equity 15.61 14.68 15.22 12.50
Efficiency ratio 66.06 67.15 65.62 66.49
SEPTEMBER 30,
---------------------------- DECEMBER 31,
BALANCE SHEET AND ASSET QUALITY 2000 1999 1999
STATISTICS ---------- ---------- ----------
Book value per share $ 22.33 $ 20.16 $ 20.30
Tangible book value per share 19.63 17.44 17.34
Average loans to deposits (year-to-date) 72.42% 68.34% 68.61%
Nonperforming and restructured assets to total assets 0.56 0.60 0.61
Allowance for loan losses to total loans 1.54 1.48 1.55
Allowance for loan losses to nonperforming
and restructured loans 228.71 169.42 183.47
THREE MONTHS ENDED SEPTEMBER 30,
CONSOLIDATED AVERAGE BALANCE SHEETS ------------------------------------------------------------------------
AND INTEREST MARGIN ANALYSIS 2000 1999
------------------------------- ------------------------------
TAXABLE EQUIVALENT BASIS AVERAGE AVERAGE AVERAGE AVERAGE
Earning assets: BALANCE YIELD/RATE BALANCE YIELD/RATE
------------ ---------- ----------- ----------
Loans $ 1,558,326 9.55% $ 1,350,909 8.90%
Securities 570,240 6.21 571,005 6.02
Federal funds sold 4,301 6.27 94,638 4.90
------------ -----------
Total earning assets 2,132,867 8.65 2,016,552 7.89
------------ -----------
Nonearning assets:
Cash and due from banks 135,892 117,265
Interest receivable and other assets 129,133 115,698
Allowance for possible loan losses (24,294) (20,230)
------------ -----------
Total nonearning assets 240,732 212,733
------------ -----------
Total assets $ 2,373,598 $ 2,229,285
============ ===========
Interest-bearing
liabilities:
Interest-bearing deposits $ 1,605,559 4.57% $ 1,554,627 3.88%
Short-term borrowings 55,021 6.55 24,869 4.58
Long-term borrowings 25,963 6.82 22,300 6.03
9.65% Capital Securities 25,000 9.71 25,000 9.70
------------ -----------
Total interest-bearing liabilities 1,711,543 4.74 1,626,796 4.01
------------ -----------
Interest-free funds:
Noninterest-bearing deposits 469,046 425,842
Interest payable and other liabilities 16,274 13,636
Stockholders' equity 176,736 163,011
------------ -----------
Total interest-free funds 662,055 602,489
------------ -----------
Total liabilities and
stockholders' equity $ 2,373,598 $ 2,229,285
============ ===========
Net interest spread 3.91% 3.88%
========== ==========
Net interest margin 4.85% 4.66%
========== ==========
</TABLE>
12
<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, 1999, the date of its annual report to
stockholders.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
-------- ----------------------------------------------------------------------------------------
<S> <C>
2.1 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.)
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 February 4, 1997 (filed as
Exhibit 4.3 to the Company's Current Report on Form 8-K dated February 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 nine months ended September 30, 2000.
----------------------------------------------------------------------------------------------------
*Filed herewith
------------------------------------------------------------------------------------------
</TABLE>
(b) No reports on Form 8-K were filed by the Company during the quarter ended
September 30, 2000.
13
<PAGE>
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 November 14, 2000 /s/ Randy P. Foraker
----------------- ---------------------------------------
(Signature)
Randy P. Foraker
Senior Vice President and Controller;
Assistant Secretary/Treasurer
(Principal Accounting Officer)
14
