Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

(9) SHARE-BASED COMPENSATION

BancFirst Corporation adopted a nonqualified incentive stock option plan (the "BancFirst ISOP") in May 1986. The Company amended the BancFirst ISOP to increase the number of shares to be issued under the plan to 2,800,000 shares in May 2011. At September 30, 2011, 109,860 shares are available for future grants. The BancFirst ISOP will terminate December 31, 2014. The options are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options granted expire at the end of fifteen years from the date of grant. Options outstanding as of September 30, 2011 will become exercisable through the year 2018. The option price must be no less than 100% of the fair market value of the stock relating to such option at the date of grant.

In June 1999, the Company adopted the BancFirst Corporation Non-Employee Directors' Stock Option Plan (the "BancFirst Directors' Stock Option Plan"). Each non-employee director is granted an option for 10,000 shares. The Company amended the BancFirst Directors' Stock Option Plan to increase the number of shares to be issued under the plan to 205,000 shares in May 2009. At September 30, 2011, 30,000 shares are available for future grants. The options are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire at the end of fifteen years from the date of grant. Options outstanding as of September 30, 2011 will become exercisable through the year 2015. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

The following table is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors' Stock Option Plan:

	Nine Months Ended September 30, 2011
				Price		Contractual Term			Value
	(Dollars in thousands, except per share data)
Outstanding at December 31, 2010		1,172,181		$	28.32
Options granted		135,000			40.21
Options exercised		(35,250	)		19.90
Options cancelled		(5,000	)		37.50
Outstanding at September 30, 2011		1,266,931			29.79		8.63	Yr	$	4,275
Exercisable at September 30, 2011		709,531			22.95		5.56	Yr	$	7,246

The following table is additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors' Stock Option Plan:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(Dollars in thousands, except per share data)
Weighted average grant-date fair value per share of options granted	$	12.11	$	10.97	$	12.46	$	16.62
Total intrinsic value of options exercised		264		440		669		1,271
Cash received from options exercised		263		615		701		1,390
Tax benefit realized from options exercised		102		170		259		492

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility, and the expected term. The fair value of each option is expensed over its vesting period.

The following table is a summary of the Company's recorded share-based employee compensation expense, net of tax:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
	(Dollars in thousands)
Share-based employee compensation expense, net of tax	$	227	$	236	$	623	$	606

The Company will continue to amortize the remaining fair value of stock options, over the remaining vesting period of approximately seven years. The following table shows the remaining fair value of stock options, net of tax:

	September 30, 2011
	(Dollars in thousands)
Fair value of stock options, net of tax	$	6,097

The following table shows the assumptions used for computing share-based employee compensation expense under the fair value method:

	Nine Months Ended September 30,
	2011			2010
Risk-free interest rate		3.32	%		3.08	%
Dividend yield		2.00	%		2.00	%
Stock price volatility		28.86	%		27.77	%
Expected term		10 Yrs			10 Yrs

The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company's stock. The expected term is estimated from the historical option exercise experience.