-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S5F/Mqryo1EUnvrVd/V+ml676ULeWFkrsbgLjvhJdxbvlsDoVgLP2LPObRByAUWV hE7l2tcC1lfISBxdJ3/kfA== 0000930661-99-001341.txt : 19990624 0000930661-99-001341.hdr.sgml : 19990624 ACCESSION NUMBER: 0000930661-99-001341 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990527 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANCFIRST CORP /OK/ CENTRAL INDEX KEY: 0000760498 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 731221379 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-14384 FILM NUMBER: 99636198 BUSINESS ADDRESS: STREET 1: 101 N BROADWAY STE 200 CITY: OKLAHOMA CITY STATE: OK ZIP: 73102-8401 BUSINESS PHONE: 4052701000 MAIL ADDRESS: STREET 1: 101 NORTH BROADWAY STREET 2: STE 200 CITY: OKLAHOMA CITY STATE: OK ZIP: 73102-8401 FORMER COMPANY: FORMER CONFORMED NAME: UNITED COMMUNITY CORP DATE OF NAME CHANGE: 19890401 10-Q/A 1 FORM 10-Q/A 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. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. BANCFIRST CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands)
MARCH 31, DECEMBER 31, --------------------------------- 1999 1998 1998 ----------- ------------ ------------ 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 =========== =========== ===========
See accompanying notes to consolidated financial statements. 2 BANCFIRST CORPORATION CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Dollars in thousands, except per share data)
THREE MONTHS ENDED MARCH 31, ------------------------------------ 1999 1998 ---------------- ---------------- 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 ============== =============
See accompanying notes to consolidated financial statements. 3 BANCFIRST CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
THREE MONTHS ENDED MARCH 31, -------------------------- 1999 1998 ------- ------ 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 ========= ==========
See accompanying notes to consolidated financial statements. 4 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 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 (4) SECURITIES The table below summarizes securities held for investment and securities available for sale.
MARCH 31, ----------------------- 1999 1998 --------- --------- 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 ========= =========
(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.
THREE MONTHS ENDED MARCH 31, ------------------------ 1999 1998 ---------- ---------- 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 ========= =========
The amount of unrealized gain or loss included in accumulated other comprehensive income is summarized below.
THREE MONTHS ENDED MARCH 31, --------------------- 1999 1998 -------- ---------- Unrealized gain (loss) on securities: Beginning balance $ 5,431 $ 1,788 Current period change (2,862) 241 -------- --------- Ending balance $ 2,569 $ 2,029 ======== =========
7 (6) NET INCOME PER COMMON SHARE Basic and diluted net income per common share are calculated as follows:
INCOME SHARES PER SHARE (NUMERATOR) (DENOMINATOR) AMOUNT ------------------ ----------------- ------------- 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 ============== ============ ==========
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 March 31, 1999 118,950 $ 36.21 Three Months Ended March 31, 1998 10,000 $ 40.00
(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 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:
Other Executive, Metropolitan Community Financial Operations Banks Banks Services & Support Eliminations Consolidated -------------- --------------- -------------- ---------------- ---------------- ---------------- 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
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 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 $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 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 BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL STATISTICS (Unaudited) (Dollars in thousands, except per share data)
THREE MONTHS ENDED MARCH 31, ---------------------- PERFORMANCE STATISTICS 1999 1998 ---------- --------- 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
BALANCE SHEET AND ASSET QUALITY MARCH 31, DECEMBER 31, STATISTICS 1999 1998 1998 -------- -------- -------------- 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
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 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 % ======= =======
13 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 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 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.
Date of Report Items Reported --------- ---------------------------------------------------------------------------- February 25, 1999 Adoption of Rights Agreement, dated as of February 25, 1999.
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 EX-27.1 2 FINANCIAL DATA SCHEDULE (1999)
9 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. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 120,216 20 159,600 0 435,374 116,224 117,509 1,350,230 20,380 2,279,061 1,975,237 39,612 18,402 42,278 0 0 9,321 194,211 2,279,061 29,768 8,338 1,724 39,830 15,192 16,689 23,141 937 1 20,016 10,058 6,222 0 0 6,222 0.67 0.66 4.57 8,405 1,689 1,162 32,796 19,659 526 310 20,380 20,380 0 1,137
EX-27.2 3 FINANCIAL DATA SCHEDULE (1998)
9 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. 1,000 3-MOS DEC-31-1998 JAN-10-1998 MAR-31-1998 130,776 148 51,077 0 454,043 153,057 155,219 1,306,199 17,963 2,195,626 1,929,716 25,374 18,759 35,025 0 0 9,632 177,120 2,195,626 29,559 8,173 850 38,582 15,131 16,305 22,277 789 0 18,375 8,891 5,595 0 0 5,595 0.60 0.59 4.86 5,732 1,803 423 24,496 17,458 813 238 17,963 17,963 0 1,024
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