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What changed in BANCFIRST CORP /OK/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BANCFIRST CORP /OK/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+272 added−285 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-27)

Top changes in BANCFIRST CORP /OK/'s 2024 10-K

272 paragraphs added · 285 removed · 234 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

93 edited+21 added−14 removed267 unchanged
Biggest changeUnder the proposed rule, larger financial institutions with total consolidated assets of at least $50 billion would be subject to additional requirements applicable to such institutions’ “senior executive officers” and “significant risk-takers.” These additional requirements, in which federal regulators were reported still to be interested in 2019, would not be applicable to the Company, BancFirst, Pegasus or Worthington. 10 Table of Contents Effective on October 2, 2023, pursuant to a final rule adopted by the SEC, NASDAQ adopted listing standards mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Biggest changeNASDAQ has adopted listing standards mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Further, the final rule separately requires a bank service provider to notify each of its affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
Further, the rule separately requires a bank service provider to notify each of its affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) 8 Table of Contents “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
A bank will be (i) “well capitalized” if the institution has a total risk-based capital ratio of 10.0% or greater, a CET1 capital ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater, and is not subject to any order or written directive by any such regulatory authority to meet and maintain a specific capital level for any capital measure; (ii) “adequately capitalized” if the institution has a total risk-based capital ratio of 8.0% or greater, a CET1 capital ratio of 4.5% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, and a leverage ratio of 4.0% or greater and is not “well capitalized”; (iii) “undercapitalized” if the institution has a total risk-based capital ratio that is less than 8.0%, a CET1 capital ratio less than 4.5%, a Tier 1 risk-based capital ratio of less than 6.0% or a leverage ratio of less than 4.0%; (iv) “significantly undercapitalized” if the institution has a total risk-based capital ratio of less than 6.0%, a CET1 capital ratio less than 3.0%, a Tier 1 risk-based capital ratio of less than 4.0% or a leverage ratio of less than 3.0%; and (v) “critically undercapitalized” if the institution’s tangible equity is equal to or less than 2.0% of average quarterly tangible assets.
Under the final rule a banking organization’s primary federal regulator must receive notification as soon as possible and no later than 36 hours after the banking organization determines that a significant computer-security incident, known as a “notification incident,” has occurred.
Under the rule a banking organization’s primary federal regulator must receive notification as soon as possible and no later than 36 hours after the banking organization determines that a significant computer-security incident, known as a “notification incident,” has occurred.
The Company believes that, as of December 31, 2023, BancFirst, Pegasus and Worthington were “well capitalized” based on the ratios provided in Note (15), “Stockholders’ Equity,” in the notes to consolidated financial statements included in Item 8. Deposit Insurance Assessments The deposits of BancFirst, Pegasus and Worthington are insured by the FDIC.
The Company believes that, as of December 31, 2024, BancFirst, Pegasus and Worthington were “well capitalized” based on the ratios provided in Note (15), “Stockholders’ Equity,” in the notes to consolidated financial statements included in Item 8. Deposit Insurance Assessments The deposits of BancFirst, Pegasus and Worthington are insured by the FDIC.
Consumer protection laws and the Durbin Amendment will reduce our noninterest income. We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers. The Dodd-Frank Act established the Consumer Financial Protection Bureau ("CFPB") with powers to supervise and enforce consumer protection laws.
Consumer protection laws and the Durbin Amendment may reduce our noninterest income. We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers. The Dodd-Frank Act established the Consumer Financial Protection Bureau ("CFPB") with powers to supervise and enforce consumer protection laws.
The financial impact on the Company of ongoing market volatility, continued inflation and rising interest rates will depend on future developments which are highly uncertain and difficult to predict. Competition with other financial institutions could adversely affect our profitability.
The financial impact on the Company of ongoing market volatility, continued inflation and higher interest rates will depend on future developments which are highly uncertain and difficult to predict. Competition with other financial institutions could adversely affect our profitability.
Bank holding companies that have elected to be treated as financial holding companies, such as the Company, may engage in a broader range of activities considered "financial in nature." 5 Table of Contents “Financial in nature” activities include securities underwriting, dealing and market making, sponsoring mutual funds and investment companies, insurance underwriting and agency, merchant banking and other activities that the Federal Reserve Board, in consultation with the Secretary of the U.S.
Bank holding companies that have elected to be treated as financial holding companies, such as the Company, may engage in a broader range of activities considered "financial in nature." “Financial in nature” activities include securities underwriting, dealing and market making, sponsoring mutual funds and investment companies, insurance underwriting and agency, merchant banking and other activities that the Federal Reserve Board, in consultation with the Secretary of the U.S.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition 12 Table of Contents transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
The Company is also subject to the accounting oversight and corporate governance requirements of the Sarbanes-Oxley Act of 2002, including: • required executive certification of financial presentation; • increased requirements for board audit committees and their members; • enhanced disclosures of controls and procedures and internal control over financial reporting; • enhanced controls over, and reporting of, insider trading and • increased penalties for financial crimes and forfeiture of executive bonuses in certain circumstances.
The Company is also subject to the accounting oversight and corporate governance requirements of the Sarbanes-Oxley Act of 2002, including: • required executive certification of financial presentation; • increased requirements for board audit committees and their members; • enhanced disclosures of controls and procedures and internal control over financial reporting; 15 Table of Contents • enhanced controls over, and reporting of, insider trading and • increased penalties for financial crimes and forfeiture of executive bonuses in certain circumstances.
Furthermore, banking regulations take into account the CRA rating when considering approval of a proposed transaction. During its last examination in 2021, a rating of “satisfactory” was received by BancFirst. During its last examination in 2020, a rating of “satisfactory” was received by Pegasus. During its last examination in 2018, a rating of "outstanding" was received by Worthington.
Furthermore, banking regulations take into account the CRA rating when considering approval of a proposed transaction. During its last examination in 2024, a rating of “satisfactory” was received by BancFirst. During its last examination in 2020, a rating of “satisfactory” was received by Pegasus. During its last examination in 2018, a rating of "outstanding" was received by Worthington.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. We also maintain important internal company data such as personally identifiable information about our employees and information relating to our operations.
Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. 21 Table of Contents We also maintain important internal company data such as personally identifiable information about our employees and information relating to our operations.
We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations. These third party vendors are sources of operational and informational security risk to us, including risks associated with operational 23 Table of Contents errors, information system interruptions or breaches and unauthorized disclosures of sensitive or confidential client or customer information.
We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations. These third party vendors are sources of operational and informational security risk to us, including risks associated with operational errors, information system interruptions or breaches and unauthorized disclosures of sensitive or confidential client or customer information.
The directors and executive officers may vote to cause us to take actions with which our other stockholders do not agree. Our amended certificate of incorporation, as well as certain provisions of banking law and Oklahoma corporate law, could make it difficult for a third party to acquire our company.
The directors and executive officers may vote to cause us to take actions with which our other stockholders do not agree. 22 Table of Contents Our amended certificate of incorporation, as well as certain provisions of banking law and Oklahoma corporate law, could make it difficult for a third party to acquire our company.
However, Texas banking law specifically empowers state-chartered banks such as Pegasus and Worthington to exercise the same powers as are conferred upon national banks by the laws of the United States and the regulations and policies of the Office of the Comptroller of the Currency, unless otherwise prohibited or limited by the Texas Banking Commissioner or the Texas Finance Commission.
However, Texas banking law specifically empowers state-chartered banks such as Pegasus and Worthington to exercise the same powers as are conferred upon national banks by the laws of the United States and the regulations and policies of the Office of the Comptroller of the Currency, unless otherwise prohibited or limited by the Texas Banking 14 Table of Contents Commissioner or the Texas Finance Commission.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we 22 Table of Contents have no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.
External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the 21 Table of Contents effectiveness of our system of internal controls.
External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls.
Until the financial holding company returns to compliance, the Federal Reserve Board may impose limitations or conditions on the conduct of its activities, and the company may not commence any of the broader financial activities permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the Federal Reserve Board.
Until the financial holding company returns to compliance, the Federal Reserve Board may impose limitations or conditions on the conduct of its activities, 5 Table of Contents and the company may not commence any of the broader financial activities permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the Federal Reserve Board.
These authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC, the Oklahoma Banking Department and the Texas Department of Banking. 4 Table of Contents The primary goals of the bank regulatory framework are to maintain a safe and sound banking system and to facilitate the conduct of monetary policy.
These authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC, the Oklahoma Banking Department and the Texas Department of Banking. The primary goals of the bank regulatory framework are to maintain a safe and sound banking system and to facilitate the conduct of monetary policy.
Safety and Soundness Standards The FDI Act requires the federal bank regulatory agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits and such other operational and managerial standards as the agencies deem appropriate.
Safety and Soundness Standards The FDI Act requires the federal bank regulatory agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits and such other operational and managerial standards 9 Table of Contents as the agencies deem appropriate.
The final rule introduces new tests under which the performance of banks with over $2 billion in assets will be assessed. The new rule also includes data collection and reporting requirements, some of which are applicable only to banks with over $10 billion in assets, such as BancFirst.
The final rule introduces new tests under which the performance of banks with over $2 billion in assets will be assessed. The new rule also includes 12 Table of Contents data collection and reporting requirements, some of which are applicable only to banks with over $10 billion in assets, such as BancFirst.
Among other things, extensions of credit to insiders are required to be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons.
Among other things, extensions of credit to insiders are required to be made on terms that are 6 Table of Contents substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.
A financial 10 Table of Contents institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to this type of cyber-attack.
Technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for financial institutions and other companies to provide electronic and internet-based financial solutions for processing electronic payment transactions.
Technological advances and the growth of e-commerce have made it possible for non-depository institutions to 20 Table of Contents offer products and services that traditionally were banking products, and for financial institutions and other companies to provide electronic and internet-based financial solutions for processing electronic payment transactions.
They provide a wide range of banking services to individual and corporate customers and are subject to competition from other local, regional, and national financial institutions. Human Capital Resources As of December 31, 2023, the Company employed 2,109 full time equivalent employees. None of its employees are represented by collective bargaining agreements.
They provide a wide range of banking services to individual and corporate customers and are subject to competition from other local, regional, and national financial institutions. Human Capital Resources As of December 31, 2024, the Company employed 2,135 full time equivalent employees. None of its employees are represented by collective bargaining agreements.
In the metropolitan markets served by BancFirst, the Company’s strategy is to focus on the needs of local businesses that seek more responsive services than are available at larger institutions.
In the metropolitan markets served by BancFirst, the Company’s strategy is to focus on the needs of local businesses and seek to provide more responsive services than are available at larger institutions.
A change in statutes, regulations or regulatory policies applicable to the Company, including changes in interpretation or implementation thereof, could have a material effect on the Company’s business. Regulatory Agencies In the U.S., banking is regulated at both the federal and state level.
A change in statutes, regulations or regulatory policies applicable to the Company, including changes in interpretation or implementation thereof, could have a material effect on the Company’s business. 4 Table of Contents Regulatory Agencies In the U.S., banking is regulated at both the federal and state level.
Most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. Consumer Laws and Regulations Banks and other financial institutions are subject to numerous laws and regulations intended to protect consumers in their transactions with banks.
Subject to pending litigation, we anticipate most provisions of the final rule will become effective on January 1, 2026, and the data reporting requirements will become effective on January 1, 2027. Consumer Laws and Regulations Banks and other financial institutions are subject to numerous laws and regulations intended to protect consumers in their transactions with banks.
Any such losses could have a material adverse effect on our financial condition and results of operations. 18 Table of Contents Negative developments in the banking industry could adversely affect our financial condition and results of operations.
Any such losses could have a material adverse effect on our financial condition and results of operations. Negative developments in the banking industry could adversely affect our financial condition and results of operations.
As reported by the Federal Deposit Insurance Corporation (“FDIC”), the Company’s market share of deposits within the state of Oklahoma was 6.86% as of June 30, 2023 and 7.19% as of June 30, 2022. Marketing to existing and potential customers is performed through a variety of media advertising, direct mail and direct personal contacts.
As reported by the Federal Deposit Insurance Corporation (“FDIC”), the Company’s market share of deposits within the state of Oklahoma was 6.84% as of June 30, 2024 and 6.86% as of June 30, 2023. Marketing to existing and potential customers is performed through a variety of media advertising, direct mail and direct personal contacts.
In June 2023, the Federal Trade Commission's amendments to the Gramm-Leach-Bliley Act's Safeguards Rule went into effect requiring financial institutions to: (i) appoint a qualified individual to oversee and implement their information security programs; (ii) implement additional criteria for information security risk assessments; (iii) implement safeguards identified by assessments, including access controls, data inventory, data disposal, change management, and monitoring, among other things; (iv) implement information system monitoring in the form of either "continuous monitoring" or "periodic penetration testing;" (v) implement additional controls including training for security personnel, periodic assessment of service providers, written incident response plans, and periodic reports from the qualified individual to the board of directors.
Under the Federal Trade Commission's amendments to the Gramm-Leach-Bliley Act's Safeguards Rule financial institutions are required to: (i) appoint a qualified individual to oversee and implement their information security programs; (ii) implement additional criteria for information security risk assessments; (iii) implement safeguards identified by assessments, including access controls, data inventory, data disposal, change management, and monitoring, among other things; (iv) implement information system monitoring in the form of either "continuous monitoring" or "periodic penetration testing;" (v) implement additional controls including training for security personnel, periodic assessment of service providers, written incident response plans, and periodic reports from the qualified individual to the board of directors.
As a result of other such businesses, our earnings could be subject to risks and uncertainties that are different from those to which our commercial banking services are subject. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources.
We may in the future develop or acquire other non-banking businesses. As a result of other such businesses, our earnings could be subject to risks and uncertainties that are different from those to which our commercial banking services are subject. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources.
For more information on the Company’s Operating Segments, see Note (23), “Segment Information,” to the Company’s Consolidated Financial Statements. Control of Company Affiliates of the Company beneficially own approximately 38% of the outstanding shares of the Company’s common stock as of January 31, 2024.
For more information on the Company’s Operating Segments, see Note (23), “Segment Information,” to the Company’s Consolidated Financial Statements. Control of Company Affiliates of the Company beneficially own approximately 36% of the outstanding shares of the Company’s common stock as of January 31, 2025.
The increased assessment is expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC's amended restoration plan. 9 Table of Contents The Company’s FDIC deposit insurance assessment expense totaled $5.8 million, $4.7 million and $3.5 million in 2023, 2022 and 2021, respectively.
The increased assessment is expected to improve the likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35% by the statutory deadline prescribed under the FDIC's amended restoration plan. The Company’s FDIC deposit insurance assessment expense totaled $6.3 million, $5.8 million and $4.7 million in 2024, 2023 and 2022, respectively.
These include developments in smart cards, e-commerce, mobile and radio frequency and proximity payment devices, such as contactless cards. Ongoing or increased competition in payment processing may restrict our ability to generate interchange revenue in the future. For the year ended December 31, 2023, debit card interchange revenue represented 20.3% of our noninterest income.
These include developments in smart cards, e-commerce, mobile and radio frequency and proximity payment devices, such as contactless cards. Ongoing or increased competition in payment processing may restrict our ability to generate interchange revenue in the future. For the year ended December 31, 2024, debit card interchange revenue represented 14.5% of our noninterest income.
A significant portion of our noninterest income is derived from service charge income, including NSF fees, which represented 15.1% of our noninterest income for the year ended December 31, 2023. Violations of applicable consumer protection laws could result in enforcement actions and significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
A significant portion of our noninterest income is derived from service charge income, including NSF fees, which represented 16.8% of our noninterest income for the year ended December 31, 2024. Violations of applicable consumer protection laws could result in enforcement actions and significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.
Accordingly, BancFirst’s operations are subject to various requirements and restrictions of Oklahoma state law relating to loans, lending limits, interest rates payable on deposits, investments, mergers and acquisitions, borrowings, dividends, capital adequacy and other matters.
State Regulation BancFirst is an Oklahoma-chartered state bank. Accordingly, BancFirst’s operations are subject to various requirements and restrictions of Oklahoma state law relating to loans, lending limits, interest rates payable on deposits, investments, mergers and acquisitions, borrowings, dividends, capital adequacy and other matters.
Each listed company was required to adopt by December 1, 2023, a compliant policy governing recovery of erroneously awarded compensation as required by the new listing standards. The Company has adopted a compliant policy governing the recovery of erroneously awarded compensation as required by the listing standards, which is filed as Exhibit 97 to this Form 10-K.
Each listed company is required to have a compliant policy governing recovery of erroneously awarded compensation as required by the new listing standards. The Company has adopted a compliant policy governing the recovery of erroneously awarded compensation as required by the listing standards, which is filed as Exhibit 97 to this Form 10-K.
Further, competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and sweeps. If such movement is permanent, it will reduce our net interest margin going forward.
Further, competition for deposits has recently increased and available yields have similarly increased, causing non-interest-bearing deposits to move to interest-bearing deposits and off-balance sheet sweep accounts. If such movement is permanent, it will reduce our net interest margin going forward.
Residential loans consist primarily of home loans in non-metropolitan areas, which are generally shorter in duration than typical mortgages and reprice within five years. BancFirst’s range of deposit services include checking accounts, Negotiable Order of Withdrawal (“NOW”) accounts, savings accounts, money market accounts, sweep accounts, club accounts, individual retirement accounts and certificates of deposit.
Residential loans consist primarily of home loans in non-metropolitan areas, which are generally shorter in duration than typical mortgages and reprice within five years. 2 Table of Contents BancFirst’s range of deposit services include checking accounts, Negotiable Order of Withdrawal (“NOW”) accounts, savings accounts, money market accounts, Health Savings Accounts, Coverdell Education Accounts, individual retirement accounts and certificates of deposit.
The Volcker Rule The Volcker Rule under the Dodd-Frank Act restricts banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds. The Volcker Rule does not significantly impact the operations of the Company as it does not engage in the businesses prohibited by the Volcker Rule.
The Volcker Rule The Volcker Rule under the Dodd-Frank Act restricts banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds. The Volcker Rule does not significantly impact the operations of the Company.
The proposal would, if adopted, adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.
The proposal would, if adopted, adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. The comment period for this proposal ended in May 2024.
All of these companies are Oklahoma entities. Pegasus and Worthington's lending activities include private banking, commercial and residential real estate, commercial and industrial and energy loans. They each have a full complement of deposit products including sweep accounts and securities investment products.
Pegasus and Worthington's lending activities include private banking, commercial and residential real estate, commercial and industrial and energy loans. They each have a full complement of deposit products including sweep accounts and securities investment products.
In addition, the Company owns 100% of the common securities of BFC Capital Trust II (a Delaware business trust), 100% of Council Oak Partners LLC, an Oklahoma limited liability company engaging in investing activities and 100% of BancFirst Insurance Services, Inc., an Oklahoma business corporation operating as an independent insurance agency.
In addition, the Company owns 100% of the common securities of BFC Capital Trust II (a Delaware business trust), 100% of Council Oak Partners LLC, an Oklahoma limited liability company engaging in investing activities, 100% of BancFirst Insurance Services, Inc., an Oklahoma business corporation operating as an independent insurance agency and 100% of BFC-PNC, LLC, an operating subsidiary to hold other real estate owned.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. 17 Table of Contents If a significant number of customers fail to perform under their loans, our business, profitability and financial condition would be adversely affected.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. If a significant number of customers fail to perform under their loans, our business, profitability and financial condition would be adversely affected. There are inherent risks associated with our lending activities.
There are inherent risks associated with our lending activities. As a lender, we face the risk that a significant number of our borrowers will fail to pay their loans because of other factors, including the impact of changes in interest rates and changes in the economic conditions in the markets where we operate.
As a lender, we face the risk that a significant number of our borrowers will fail to pay their loans because of other factors, including the impact of changes in interest rates and changes in the economic conditions in the markets where we operate.
Further, to the extent that any of the information contained in this report constitutes forward-looking statements, the risk factors set forth below also are cautionary statements identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us. 16 Table of Contents Risks Related to Our Business Interest Rate Risks Fluctuations in interest rates could reduce our profitability.
Further, to the extent that any of the information contained in this report constitutes forward-looking statements, the risk factors set forth below also are cautionary statements identifying important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us.
The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving our customers, the effective use of technology increases our efficiency and enables us to reduce costs.
Failure to keep pace with technological change could adversely affect our results of operations and financial condition. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving our customers, the effective use of technology increases our efficiency and enables us to reduce costs.
Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. 11 Table of Contents Fiscal and Monetary Policies The Company’s business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies.
See Item 1A. Risk Factors for a further discussion of risks related to cybersecurity and Item 1C. Cybersecurity for a further discussion of risk management strategies and governance processes related to cybersecurity. Fiscal and Monetary Policies The Company’s business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies.
Our directors and executive officers, as a group, beneficially owned 33.55% of our outstanding common stock as of January 31, 2024.
Our directors and executive officers, as a group, beneficially owned 32% of our outstanding common stock as of January 31, 2025.
The geographic dispersion of the BancFirst’s banking locations presents several different levels and types of competition. In general, however, each location competes with other banking institutions, savings and loan associations, brokerage firms, personal loan finance companies and credit unions within their respective market areas. The communities in which BancFirst maintains offices are generally local trade centers throughout Oklahoma.
In general, however, each location competes with other banking institutions, savings and loan associations, brokerage firms, personal loan finance companies and credit unions within their respective market areas. 3 Table of Contents The communities in which BancFirst maintains offices are generally local trade centers throughout Oklahoma.
As of December 31, 2023, the price per barrel of crude oil was approximately $76 down from $78 at December 31, 2022. At December 31, 2023, the price per million British thermal units of natural gas was approximately $2.51 down from $4.48 at December 31, 2022.
As of December 31, 2024, the price per barrel of crude oil was approximately $72 down from $76 at December 31, 2023. At December 31, 2024, the price per million British thermal units of natural gas was approximately $3.02 up from $2.51 at December 31, 2023.
BancFirst currently has 106 banking locations serving 59 communities throughout Oklahoma, Pegasus has 3 banking locations in the Dallas Metroplex area and Worthington has 5 locations in the Dallas-Fort Worth Metroplex area.
BancFirst currently has 104 banking locations serving 59 communities throughout Oklahoma, Pegasus has 3 banking locations in the Dallas Metroplex area and Worthington has 3 locations in the Fort Worth Metroplex area, one location in Arlington Texas and one location in Denton Texas.
In addition, BancFirst offers Small Business Administration (“SBA”) guaranteed loans through BancFirst Commercial Capital, a division established in 1991. 2 Table of Contents Consumer lending activities of BancFirst consist of traditional forms of financing for automobiles, home equity loans and other personal loans.
Most forms of commercial lending are offered, including commercial mortgages, other forms of asset-based financing and working capital lines of credit. In addition, BancFirst offers Small Business Administration (“SBA”) guaranteed loans through BancFirst Commercial Capital, a division established in 1991. Consumer lending activities of BancFirst consist of traditional forms of financing for automobiles, home equity loans and other personal loans.
Deterioration in the real estate markets could lead to losses, which could have a material negative effect on our financial condition and results of operations. Loans secured by real estate constitute a significant portion of our loan portfolio. At December 31, 2023, this percentage was approximately 69%.
A substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate markets could lead to losses, which could have a material negative effect on our financial condition and results of operations. Loans secured by real estate constitute a significant portion of our loan portfolio.
We have in the past discovered, and may in the future discover, areas of our internal control over financial reporting that need improvement. If our auditors or we discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our consolidated financial statements and have an adverse effect on our stock price.
If our auditors or we discover a material weakness, the disclosure of that fact, 23 Table of Contents even if quickly remedied, could reduce the market’s confidence in our consolidated financial statements and have an adverse effect on our stock price.
Training resources and educational assistance are readily available, and the Company strives to promote, where practical, from within the Company. The Company identifies high potential candidates and provides specifically tailored plans for actualizing their development goals and career trajectories. The Company views diversity, equity, and inclusion as a cultural and business imperative that must permeate its culture.
Training resources and educational assistance are readily available, and the Company strives to promote, where practical, from within the Company. The Company identifies high potential candidates and provides specifically tailored plans for actualizing their development goals and career trajectories.
If, as a result of an examination of a bank, the Texas Department of Banking determines that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the bank’s operations are unsatisfactory or that the management of the bank is violating or has violated any law or regulation, various remedies, including the remedy of injunction, are available to the Texas Department of Banking. 15 Table of Contents In addition to the provisions of the GLB Act that authorize state member banks to invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law) on the same conditions that apply to national banks, Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) provides that FDIC-insured state banks such as BancFirst, Pegasus and Worthington may engage directly or through a subsidiary in certain activities that are not permissible for a national bank, if the activity is authorized by applicable state law, the FDIC determines that the activity does not pose a significant risk to the DIF and the bank is in compliance with its applicable capital standards.
In addition to the provisions of the GLB Act that authorize state member banks to invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law) on the same conditions that apply to national banks, Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) provides that FDIC-insured state banks such as BancFirst, Pegasus and Worthington may engage directly or through a subsidiary in certain activities that are not permissible for a national bank, if the activity is authorized by applicable state law, the FDIC determines that the activity does not pose a significant risk to the DIF and the bank is in compliance with its applicable capital standards.
Climate-Related and Other Environmental, Social and Governance Developments In recent years, federal, state and international lawmakers and regulators have increased their focus on risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance matters.
Climate-Related and Other Environmental, Social and Governance Developments In recent years, federal, state and international lawmakers and regulators have increased their focus on risk oversight, disclosures and practices in connection with climate change and other environmental, social and governance matters. For example, in March 2024, the SEC adopted a rule on the enhancement and standardization of climate-related disclosures for investors.
While our record of asset quality has historically been solid, we cannot guarantee that our record of asset quality will be maintained in future periods.
At December 31, 2024, this percentage was approximately 71%. While our record of asset quality has historically been solid, we cannot guarantee that our record of asset quality will be maintained in future periods.
The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers; those rules are, based on the SEC rules hearing agenda, expected to be proposed in April, 2024. Market Areas and Competition The banking environment in Oklahoma is very competitive.
The SEC has also announced plans to propose rules to require enhanced disclosure regarding human capital management and board diversity for public issuers; those rules have not, however, been proposed and the status of those plans is unclear. Market Areas and Competition The banking environment in Oklahoma is very competitive.
Failure to comply with consumer protection requirements may also result in the Company’s failure to obtain any required bank regulatory approval for merger or acquisition transactions the Company may wish to pursue or its prohibition from engaging in such transactions even if approval is not required. 13 Table of Contents The Consumer Financial Protection Bureau (“CFPB”) is a federal agency responsible for implementing, examining and enforcing compliance with federal consumer protection laws.
Failure to comply with consumer protection requirements may also result in the Company’s failure to obtain any required bank regulatory approval for merger or acquisition transactions the Company may wish to pursue or its prohibition from engaging in such transactions even if approval is not required.
The Basel III Capital Rules, among other things, (i) include a capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CETI and not to the other components of capital, and (iv) require certain deductions/adjustments to capital. 7 Table of Contents Under the Basel III Capital Rules, the initial minimum capital ratios are as follows: • 4.5% CET1 to risk-weighted assets. • 6.0% Tier 1 capital to risk-weighted assets. • 8.0% Total capital to risk-weighted assets. • 4.0% Tier 1 capital to average quarterly assets (known as the “leverage ratio”).
The Basel III Capital Rules, among other things, (i) include a capital measure called “Common Equity Tier 1” (“CET1”), (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CETI and not to the other components of capital, and (iv) require certain deductions/adjustments to capital.
If management’s judgments later prove to have been inaccurate, we may experience unexpected losses that could be substantial. 20 Table of Contents Additionally, the processes we use to estimate our expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
Additionally, the processes we use to estimate our expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depends upon the use of analytical and forecasting models.
The Basel III Capital Rules require the Company, BancFirst, Pegasus and Worthington to maintain an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, (iii) a minimum ratio of total capital to risk-weighted assets of at least 10.5%; and (iv) a minimum leverage ratio of 4%.
Banking institutions with a ratio of CET1 to risk-weighted assets below the effective minimum (4.5% plus the capital conservation buffer and, if applicable, the countercyclical capital buffer) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall. 7 Table of Contents The Basel III Capital Rules require the Company, BancFirst, Pegasus and Worthington to maintain an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, (iii) a minimum ratio of total capital to risk-weighted assets of at least 10.5%; and (iv) a minimum leverage ratio of 4%.
The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. In addition, for a capital restoration plan to be acceptable, the depository institution’s parent holding company must guarantee that the institution will comply with such capital restoration plan.
The agencies may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital.
At the same time, BancFirst generally has a larger lending capacity, broader product line and greater operational scale than its principal competitors do in the non-metropolitan market areas (which typically are independently owned community banks).
At the same time, BancFirst generally has a larger lending capacity, broader product line and greater operational scale than its principal competitors do in the non-metropolitan market areas (which typically are independently owned community banks). Each full-service banking office has senior management with significant lending experience who exercise substantial autonomy over credit and pricing decisions.
Worthington became a Federal Reserve System member bank on September 1, 2023, and Pegasus became a Federal Reserve System member bank on October 12, 2023, which changed their primary regulator from the FDIC to the Federal Reserve System. Their deposits are insured by the Deposit Insurance Fund (“DIF”) of the FDIC to the extent provided by law.
Each of BancFirst, Worthington and Pegasus is a Federal Reserve System member bank whose primary federal regulator is the Federal Reserve System. Their deposits are insured by the Deposit Insurance Fund (“DIF”) of the FDIC to the extent provided by law.
Although as of December 31, 2023, oil and gas loans comprised 7.66% of our loan portfolio, the impact of lower oil and natural gas prices could have an indirect impact on our other loan portfolio segments, for example, commercial real estate (“CRE”). A substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate.
Although as of December 31, 2024, oil and 16 Table of Contents gas loans comprised 6.4% of our loan portfolio, the impact of lower oil and natural gas prices could have an indirect impact on our other loan portfolio segments, for example, commercial real estate (“CRE”).
In November 2021, federal banking agencies, including the Federal Reserve Board and the FDIC, issued a final rule to improve the sharing of information about cyber incidents, compliance was required by May 1, 2022.
Federal banking agencies, including the Federal Reserve Board and the FDIC, issued a rule to improve the sharing of information about cyber incidents.
Our continued success is largely dependent upon the continued growth or stability of the communities we serve. A decline in the economies of these communities could negatively impact our net income and profitability.
As a result, our financial condition, results of operations and cash flows are subject to changes in the economic conditions in the State of Oklahoma. Our continued success is largely dependent upon the continued growth or stability of the communities we serve. A decline in the economies of these communities could negatively impact our net income and profitability.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses. We cannot assure you that our future credit losses will not have any material adverse effects on our business, profitability or financial condition.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for credit losses.
BancFirst has the following 100% owned principal subsidiaries: BancFirst Agency, Inc., a credit life insurance agency, BFC-PNC, LLC and BF Brazito, LLC, both operating subsidiaries to hold other real estate owned, BFTower, LLC (which owns a 49% ownership interest in SFPG, LLC, a parking garage, and a 50% ownership interest in ParcFirst@Bricktown, LLC, a surface parking lot).
BancFirst has the following 100% owned principal subsidiaries: BancFirst Agency, Inc., a credit life insurance agency and BFTower, LLC (which owns a 49% ownership interest in SFPG, LLC, a parking garage, and a 100% ownership interest in ParcFirst@Bricktown, LLC, a surface parking lot). All of these companies are Oklahoma entities.
Federal Reserve Board rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction.
Federal Reserve Board rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. 11 Table of Contents An upward adjustment of no more than 1 cent to an issuer's debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards.
BancFirst operates exclusively within the State of Oklahoma and, unlike larger national or superregional banks that serve a broader and more diverse geographic region; BancFirst lending is also primarily concentrated in the State of Oklahoma. As a result, our financial condition, results of operations and cash flows are subject to changes in the economic conditions in the State of Oklahoma.
A slowdown in the general economic activity, particularly in Oklahoma, could negatively impact our business. BancFirst operates exclusively within the State of Oklahoma and, unlike larger national or superregional banks that serve a broader and more diverse geographic region; BancFirst lending is also primarily concentrated in the State of Oklahoma.
We realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings.
Risks Related to Our Business Interest Rate Risks Fluctuations in interest rates could reduce our profitability. We realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings.
If these issues or liabilities exceed our estimates, our results of operations and financial condition may be negatively affected. If we pursue a future acquisition, our management could spend a significant amount of time and effort identifying and completing the acquisition.
If we pursue a future acquisition, our management could spend a significant amount of time and effort identifying and completing the acquisition.
In addition, in the current financial and economic environment, the Federal Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong. 6 Table of Contents Transactions with Affiliates The Company, BancFirst, Pegasus and Worthington are deemed affiliates of each other within the meaning of the Federal Reserve Act, and covered transactions between affiliates are subject to certain restrictions, including compliance with Sections 23A and 23B of the Federal Reserve Act and their implementing regulations.
In addition, in the current financial and economic environment, the Federal Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.
Actions by monetary and fiscal authorities, including the Federal Reserve Board, could have an adverse effect on our deposit levels, loan demand or business earnings. See “Item 1 - Business-Supervision and Regulation.” Our profitability is greatly dependent upon our earning a positive interest spread between our loan and securities portfolio, and our funding deposits and borrowings.
See “Item 1 - Business-Supervision and Regulation.” Our profitability is greatly dependent upon our earning a positive interest spread between our loan and securities portfolio, and our funding deposits and borrowings.
It cannot be predicted whether, or in what form, any such legislation or regulatory changes in policy may be enacted or the extent to which the business of the Company would be affected thereby. 14 Table of Contents State Regulation BancFirst is an Oklahoma-chartered state bank.
In addition, the various bank regulatory agencies often adopt new rules, regulations, and policies to implement and enforce existing legislation. It cannot be predicted whether, or in what form, any such legislation or regulatory changes in policy may be enacted or the extent to which the business of the Company would be affected thereby.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIncident Response and Recovery Planning The Company has established comprehensive incident response and recovery plans and continues to regularly test and evaluate the effectiveness of those plans. The Company's incident response and recovery plans address and guide its employees, management and the Board on its response to a cybersecurity incident.
Biggest changeIncident Response and Recovery Planning The Company has established comprehensive incident response and recovery plans and continues to regularly test and evaluate the effectiveness of those plans.
The Board receives reports on information security and cybersecurity from the Information Security Committee at least four times a year. Risk Management and Strategy The Company continuously seeks to identify threats, vulnerabilities, and cybersecurity risks on information assets. Threats are identified through experience, regulatory requirements, information sharing, third party vendors, internal and external security assessments, and industry periodicals.
The Board receives reports on information security and cybersecurity from the Information Security Committee at least four times a year. Risk Management and Strategy The Company continuously seeks to identify threats, vulnerabilities, and cybersecurity risks on information assets. Threats are identified through experience, regulatory alerts, information sharing, third party vendors, internal and external security assessments, and industry periodicals.
The CISO manages a team of cybersecurity professionals with broad experience and expertise, including threat assessments and detection, mitigation technologies, cybersecurity training, incident response, insider threats and regulatory compliance. The Company has not, as of the date of this Form 10-K, experienced a cybersecurity threat or incident that resulted in a material adverse impact to its business or operations.
The CISO manages a team of cybersecurity professionals with broad experience and expertise, including threat assessments and detection, mitigation technologies, cybersecurity training, incident response, insider threats and regulatory compliance. 24 Table of Contents The Company has not, as of the date of this Form 10-K, experienced a cybersecurity threat or incident that resulted in a material adverse impact to its business or operations.
From time to time, the Company engages third party consultants or other advisors to assist in assessing, identifying and/or managing cybersecurity threats. The Company's Internal Audit function also conducts information technology and cybersecurity reviews and assessments. 25 Table of Contents Threat Intelligence The Company considers threat intelligence from third party sources to strengthen systems and network preparedness for cybersecurity risks.
From time to time, the Company engages third party consultants or other advisors to assist in assessing, identifying and/or managing cybersecurity threats. The Company's Internal Audit function also conducts information technology and cybersecurity reviews and assessments. Threat Intelligence The Company considers threat intelligence from third party sources to strengthen systems and network preparedness for cybersecurity risks.
Training and Awareness The Company provides awareness training to its employees to help identify, avoid and mitigate cybersecurity threats. All employees with network access participate annually in required training, including spear phishing and other awareness training. The Company also periodically hosts tabletop exercises with management and other employees to practice cyber incident response.
All employees with network access participate annually in required training, including spear phishing and other awareness training. The Company also periodically conducts walkthrough exercises with management and other employees to practice cyber incident response.
Added
The Company's incident response and recovery plans address and guide its employees, management and the Board on its response to a cybersecurity incident. 25 Table of Contents Training and Awareness The Company provides awareness training to its employees to help identify, avoid and mitigate cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. The principal offices of the Company are located at 100 North Broadway Ave., Oklahoma City, Oklahoma 73102. The Company owns substantially all of the properties and buildings in which its various offices and facilities are located. These properties include the main bank and 105 additional BancFirst branches in Oklahoma.
Biggest changeItem 2. Properties. The principal offices of the Company are located at 100 North Broadway Ave., Oklahoma City, Oklahoma 73102. The Company owns substantially all of the properties and buildings in which its various offices and facilities are located. These properties include the main bank and 103 additional BancFirst branches in Oklahoma.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock.
Biggest changeThe SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options, for distributions of restricted stock units or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock.
The amount approved is subject to amendment. The Stock Repurchase Program will remain in effect until all shares are repurchased. No purchases were made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended December 31, 2023.
The amount approved is subject to amendment. The Stock Repurchase Program will remain in effect until all shares are repurchased. No purchases were made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended December 31, 2024.
All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee. At December 31, 2023, up to 479,784 shares could be repurchased under the Stock Repurchase Program.
All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee. At December 31, 2024, up to 479,784 shares could be repurchased under the Stock Repurchase Program.
Equity Compensation Plan Information Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2023 is presented in the table below. All of the Company’s stock-based compensation plans have been approved by the Company’s stockholders.
Equity Compensation Plan Information Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2024 is presented in the table below. All of the Company’s stock-based compensation plans have been approved by the Company’s stockholders.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Market Prices and Dividends The Company’s Common Stock is listed on the NASDAQ Global Select Market System (“NASDAQ/GS”) and is traded under the symbol “BANF”. As of January 31, 2024, there were 228 holders of record of our Common Stock.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Market Prices and Dividends The Company’s Common Stock is listed on the NASDAQ Global Select Market System (“NASDAQ/GS”) and is traded under the symbol “BANF”. As of January 31, 2025, there were 212 holders of record of our Common Stock.
(a) (b) (c) Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) Equity compensation plans approved by security holders 1,393,041 $ 52.78 486,111 Performance Graph The Company’s performance graph is incorporated by reference from “Performance Graph” contained on the last page of this 10-K report.
(a) (b) (c) Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) Equity compensation plans approved by security holders 1,111,730 $ 58.16 492,822 Performance Graph The Company’s performance graph is incorporated by reference from “Performance Graph” contained on the last page of this 10-K report.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS Taxable Equivalent Basis (Dollars in thousands) December 31, 2023 December 31, 2022 December 31, 2021 Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate ASSETS Earning assets: Loans (1) $ 7,292,871 $ 467,951 6.42 % $ 6,611,617 $ 336,739 5.09 % $ 6,220,192 $ 316,618 5.09 % Debt securities – taxable 1,565,697 36,838 2.35 1,295,762 24,456 1.89 538,157 6,327 1.18 Debt securities – tax exempt 3,339 91 2.71 3,877 118 3.03 11,372 258 2.27 Federal funds sold and interest-bearing deposits with banks 2,343,182 119,486 5.10 3,450,093 58,931 1.71 3,268,443 4,366 0.13 Total earning assets 11,205,089 624,366 5.57 11,361,349 420,244 3.70 10,038,164 327,569 3.26 Nonearning assets: Cash and due from banks 204,394 260,028 271,004 Interest receivable and other assets 814,419 865,744 694,191 Allowance for credit losses (96,154 ) (87,567 ) (88,028 ) Total nonearning assets 922,659 1,038,205 877,167 Total assets $ 12,127,748 $ 12,399,554 $ 10,915,331 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Money market and interest-bearing checking deposits $ 4,361,001 $ 142,275 3.26 % $ 4,090,098 $ 31,245 0.76 % $ 3,566,394 $ 4,147 0.12 % Savings deposits 1,087,642 29,575 2.72 1,147,673 6,402 0.56 1,019,042 542 0.05 Time deposits 797,179 23,196 2.91 672,179 4,318 0.64 654,801 3,543 0.54 Short-term borrowings 6,432 312 4.84 4,333 60 1.39 2,608 2 0.08 Subordinated debt 86,070 4,122 4.79 86,013 4,122 4.79 56,793 3,130 5.51 Total interest-bearing liabilities 6,338,324 199,480 3.15 6,000,296 46,147 0.77 5,299,638 11,364 0.21 Interest-free funds: Noninterest-bearing deposits 4,343,646 5,097,813 4,437,352 Interest payable and other liabilities 108,438 102,691 52,069 Stockholders’ equity 1,337,340 1,198,754 1,126,272 Total interest free funds 5,789,424 6,399,258 5,615,693 Total liabilities and stockholders’ equity $ 12,127,748 $ 12,399,554 $ 10,915,331 Net interest income $ 424,886 $ 374,097 $ 316,205 Net interest spread 2.42 % 2.93 % 3.05 % Effect of interest free funds 1.37 % 0.36 % 0.10 % Net interest margin 3.79 % 3.29 % 3.15 % 33 Table of Contents The following table depicts, for the periods indicated, selected income statement data and other selected data: BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) At and for the Year Ended December 31, 2023 2022 2021 Income Statement Data Net interest income $ 424,456 $ 373,673 $ 315,657 Provision for (benefit from) credit losses 7,458 10,076 (8,690 ) Noninterest income 185,408 183,747 170,032 Noninterest expense 332,458 309,912 285,981 Net income 212,465 193,100 167,630 Per Common Share Data Net income – basic $ 6.45 $ 5.89 $ 5.12 Net income – diluted 6.34 5.77 5.03 Cash dividends 1.66 1.52 1.40 Selected Financial Ratios Performance ratios: Return on average assets 1.75 % 1.56 % 1.54 % Return on average stockholders’ equity 15.89 16.11 14.88 Cash dividends payout ratio 25.74 25.81 27.34 Net interest spread 2.42 2.93 3.05 Net interest margin 3.79 3.29 3.15 Efficiency ratio 54.51 55.60 58.88 Net Interest Income Net interest income, which is the Company’s principal source of operating revenue, increased in 2023 by $50.8 million, to a total of $424.5 million, compared to an increase of $58.0 million in 2022.
Biggest changeCONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS Taxable Equivalent Basis (Dollars in thousands) December 31, 2024 December 31, 2023 December 31, 2022 Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate ASSETS Earning assets: Loans $ 7,958,463 $ 555,426 6.96 % $ 7,292,871 $ 467,951 6.42 % $ 6,611,617 $ 336,739 5.09 % Securities – taxable 1,448,103 34,300 2.36 1,565,697 36,838 2.35 1,295,762 24,456 1.89 Securities – tax exempt 2,415 93 3.85 3,339 91 2.71 3,877 118 3.03 Federal funds sold and interest-bearing deposits with banks 2,553,503 134,941 5.27 2,343,182 119,486 5.10 3,450,093 58,931 1.71 Total earning assets 11,962,484 724,760 6.04 11,205,089 624,366 5.57 11,361,349 420,244 3.70 Nonearning assets: Cash and due from banks 201,666 204,394 260,028 Interest receivable and other assets 810,732 814,419 865,744 Allowance for credit losses (99,098 ) (96,154 ) (87,567 ) Total nonearning assets 913,300 922,659 1,038,205 Total assets $ 12,875,784 $ 12,127,748 $ 12,399,554 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Money market and interest-bearing checking deposits $ 4,992,037 $ 181,201 3.62 % $ 4,361,001 $ 142,275 3.26 % $ 4,090,098 $ 31,245 0.76 % Savings deposits 1,076,837 36,256 3.36 1,087,642 29,575 2.72 1,147,673 6,402 0.56 Time deposits 1,219,253 55,450 4.54 797,179 23,196 2.91 672,179 4,318 0.64 Short-term borrowings 4,999 235 4.69 6,432 312 4.84 4,333 60 1.39 Subordinated debt 86,127 4,123 4.77 86,070 4,122 4.79 86,013 4,122 4.79 Total interest-bearing liabilities 7,379,253 277,265 3.75 6,338,324 199,480 3.15 6,000,296 46,147 0.77 Interest-free funds: Noninterest-bearing deposits 3,842,049 4,343,646 5,097,813 Interest payable and other liabilities 138,007 108,438 102,691 Stockholders’ equity 1,516,475 1,337,340 1,198,754 Total interest free funds 5,496,531 5,789,424 6,399,258 Total liabilities and stockholders’ equity $ 12,875,784 $ 12,127,748 $ 12,399,554 Net interest income $ 447,495 $ 424,886 $ 374,097 Net interest spread 2.29 % 2.42 % 2.93 % Effect of interest free funds 1.44 % 1.37 % 0.36 % Net interest margin 3.73 % 3.79 % 3.29 % 33 Table of Contents The following table depicts, for the periods indicated, selected income statement data and other selected data: BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) At and for the Year Ended December 31, 2024 2023 2022 Income Statement Data Net interest income $ 446,874 $ 424,456 $ 373,673 Provision for credit losses 9,004 7,458 10,076 Noninterest income 184,575 185,408 183,747 Noninterest expense 347,164 332,458 309,912 Net income 216,354 212,465 193,100 Per Common Share Data Net income – basic $ 6.55 $ 6.45 $ 5.89 Net income – diluted 6.44 6.34 5.77 Cash dividends 1.78 1.66 1.52 Selected Financial Ratios Performance ratios: Return on average assets 1.68 % 1.75 % 1.56 % Return on average stockholders’ equity 14.23 15.89 16.11 Cash dividends payout ratio 27.18 25.74 25.81 Net interest spread 2.29 2.42 2.93 Net interest margin 3.73 3.79 3.29 Efficiency ratio 54.98 54.51 55.60 Net Interest Income Net interest income, which is the Company’s principal source of operating revenue, increased $22.4 million in 2024.
These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses.
These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses.
To estimate expected losses using historical loss information, the Company elected to utilize a methodology known as vintage loss analysis for BancFirst, Pegasus, and Worthington Bank. Vintage loss analysis measures impairment based on the age of the accounts and the historical performance of assets with similar risk characteristics.
To estimate expected losses using historical loss information, the Company elected to utilize a methodology known as vintage loss analysis for BancFirst, Pegasus, and Worthington. Vintage loss analysis measures impairment based on the age of the accounts and the historical performance of assets with similar risk characteristics.
A loan is considered collateral-dependent when the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date.
A loan is considered collateral-dependent when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral.
The Company accounts for acquisitions using the acquisition method, and as such, the results of operations of acquired companies are included from the date of acquisition forward. 32 Table of Contents Average Balances, Income Expenses and Rates The following tables present, for the periods indicated, certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities.
The Company accounts for acquisitions using the acquisition method, and as such, the results of operations of acquired companies are included from the date of acquisition forward. 32 Table of Contents Average Balances, Income Expenses and Rates The following tables present certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities.
While no assurance can be given as to the Company’s ability to pay dividends, management believes that, based upon the anticipated performance of the Company, regular dividend payments will continue in 2024. Related Party Transactions See Note (18) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s related party transactions.
While no assurance can be given as to the Company’s ability to pay dividends, management believes that, based upon the anticipated performance of the Company, regular dividend payments will continue in 2025. Related Party Transactions See Note (18) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s related party transactions.
The Company's Subordinated Notes mature on June 30, 2036. The Company has consistently generated positive net income and the Company currently expects to have positive net income for 2024. Management does not currently know of any trends that would cause the Company to be unable to provide for current obligations in the next twelve months.
The Company's Subordinated Notes mature on June 30, 2036. The Company has consistently generated positive net income and the Company currently expects to have positive net income for 2025. Management does not currently know of any trends that would cause the Company to be unable to provide for current obligations in the next twelve months.
In addition, annually or more frequently as needed, the SLC evaluates the qualitative adjustments used in the BancFirst allowance based on the information described above.
In addition, annually or more frequently as needed, the SLC evaluates the qualitative adjustments used in the allowance based on the information described above.
The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock.
The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options, for distributions of restricted stock units or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock.
The fair value of those securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for similar investments decrease. Furthermore, as of December 31, 2023, management had no intent or requirement to sell before the recovery of the unrealized loss.
The fair value of those securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for similar investments decrease. Furthermore, as of December 31, 2024, management had no intent or requirement to sell before the recovery of the unrealized loss.
The Company's adoption of ASU 2023-02 in the first quarter of 2023 increased income tax expense due to the amortization of $6.0 million of NMTC and other tax credits to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 2.22%.
The Company's adoption of ASU 2023-02 in the first quarter of 2023 increased income tax expense due to the amortization of $6.0 million of New Markets Tax Credits ("NMTC") and other tax credits to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 2.22%.
All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee. At December 31, 2023, up to 479,784 shares could be repurchased under the SRP.
All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee. At December 31, 2024, up to 479,784 shares could be repurchased under the SRP.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s financial position and results of operations for the three years ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s financial position and results of operations for the three years ended December 31, 2024.
For the year ended December 31, 2023, the Company repurchased 20,702 shares of its common stock for $1.8 million at an average price of $87.88 per share under the SRP. No shares were repurchased for the year ended December 31, 2022.
For the year ended December 31, 2023, the Company repurchased 20,702 shares of its common stock for $1.8 million at an average price of $87.88 per share under the SRP. No shares were repurchased for the year ended December 31, 2024.
Certain obligations are recognized on the Consolidated Balance Sheets, while others are off-balance sheet under U.S. generally accepted accounting principles. The Company currently has 7.20% Junior Subordinated Debentures, Subordinated Notes, operating lease payments, time deposit payments and low income housing partnership commitments. The Company’s 7.20% Junior Subordinated Debentures mature on March 31, 2034.
Certain obligations are recognized on the Consolidated Balance Sheets, while others are off-balance sheet under U.S. generally accepted accounting principles. The Company currently has 7.20% Junior Subordinated Debentures, Subordinated Notes, operating lease payments, time deposit payments, low-income housing partnership commitments and historic tax credit commitments. The Company’s 7.20% Junior Subordinated Debentures mature on March 31, 2034.
Since many of the instruments are expected to expire without being drawn upon, the total amounts do not necessarily represent commitments that will be funded in the future. 48 Table of Contents
Since many of the instruments are expected to expire without being drawn upon, the total amounts do not necessarily represent commitments that will be funded in the future. 47 Table of Contents
As of December 31, 2023, the Company had net unrealized losses largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased.
As of December 31, 2024, the Company had net unrealized losses largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased.
The Company does not consider the unrealized position of these securities to be the result of credit factors, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.
The Company does not consider the unrealized position of these securities to be the result of credit factors, because the decline in fair value is 31 Table of Contents attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.
However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $1.6 million for 2023, $1.3 million for 2022 and $2.2 million for 2021.
However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $3.5 million for 2024, $1.6 million for 2023 and $1.3 million for 2022.
Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income. This property had the following rental income and operating expenses for the periods presented.
Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income. 42 Table of Contents This property had the following rental income and operating expenses for the periods presented.
See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities. 39 Table of Contents WEIGHTED AVERAGE YIELD OF DEBT SECURITIES The following table summarizes the maturity distribution schedule with corresponding weighted average taxable equivalent yields of the debt securities portfolio at December 31, 2023.
See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities. 38 Table of Contents WEIGHTED AVERAGE YIELD OF DEBT SECURITIES The following table summarizes the maturity distribution schedule with corresponding weighted average taxable equivalent yields of the debt securities portfolio at December 31, 2024.
In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, at interest rates prevailing at the date of renewal. 41 Table of Contents The following table presents the maturity distribution of loans held for investment at December 31, 2023.
In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, at interest rates prevailing at the date of renewal. The following table presents the maturity distribution of loans held for investment at December 31, 2024.
To control this credit risk, the Company uses the same underwriting standards as it uses for loans recorded on the consolidated balance sheet. The Company had $2.8 billion and $2.6 billion in loan commitments at December 31, 2023 and 2022, respectively.
To control this credit risk, the Company uses the same underwriting standards as it uses for loans recorded on the consolidated balance sheet. The Company had $2.5 billion and $2.8 billion in loan commitments at December 31, 2024 and 2023, respectively.
In 2022, the Company recognized a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
In 2022, the Company recognized 35 Table of Contents a loss of $4.0 million on the sale of $226 million of low yielding debt securities, which were subsequently reinvested at higher yielding debt securities.
The Company’s average stockholders’ equity to average assets for 2023 was 11.03% compared to 9.67% for 2022. The Company’s leverage ratio and total risk-based capital ratios at December 31, 2023 were well in excess of the regulatory requirements. Banking institutions are generally expected to maintain capital well above the minimum levels.
The Company’s average stockholders’ equity to average assets for 2024 was 11.78% compared to 11.03% for 2023. The Company’s leverage ratio and total risk-based capital ratios at December 31, 2024 were well in excess of the regulatory requirements. Banking institutions are generally expected to maintain capital well above the minimum levels.
The fair values of the related business units are estimated using market data for prices of recent acquisitions of banks and branches. The evaluation of intangible assets and goodwill for the year ended December 31, 2023 and 2022 resulted in no impairments.
The fair values of the related reporting units are estimated using market data for prices of recent acquisitions of banks and branches. The evaluation of intangible assets and goodwill for the year ended December 31, 2024 and 2023 resulted in no impairments.
OREO included a larger commercial real estate property recorded at $29.4 million at December 31, 2023 and December 31, 2022. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income.
OREO included a larger commercial real estate property recorded at $28.1 million at December 31, 2024 and $29.4 million at December 31, 2023. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income.
The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of modified loans was approximately $5.3 million for the year ended December 31, 2023.
The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the year ended December 31, 2024 was approximately $14.8 million. The recorded balance of loans modified during the year ended December 31, 2023 was approximately $5.3 million.
Many of the loans with maturities of one year or less are renewed at existing or similar terms after scheduled principal reductions. Also, approximately 57% of loans had adjustable interest rates at December 31, 2023.
Many of the loans with maturities of one year or less are renewed at existing or similar terms after scheduled principal reductions. Also, approximately 61% of loans had adjustable interest rates at December 31, 2024.
Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. The Company's write-downs in OREO totaled $5.2 million for 2023, $3.7 million for 2022 and $538,000 for 2021.
Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. The Company's write-downs in OREO totaled $4.0 million for 2024, $5.2 million for 2023 and $3.7 million for 2022.
The credit component of the adjustment was a $1.6 million discount at December 31, 2023 and a $2.2 million discount at December 31, 2022. The rate component was $568,000 at December 31, 2023 and $738,000 at December 31, 2022. These fair value adjustments will be accreted to income over the remaining life of the loans.
The credit component of the adjustment was a $1.1 million discount at December 31, 2024 and a $1.6 million discount at December 31, 2023. The rate component was $472,000 at December 31, 2024 and $568,000 at December 31, 2023. These fair value adjustments will be accreted to income over the remaining life of the loans.
At December 31, 2023 and December 31, 2022, 98% of the available for sale debt securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies.
At December 31, 2024 and December 31, 2023, 99% of the available for sale debt securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies.
The Company had $84.9 million and $72.2 million in stand-by letters of credit at December 31, 2023 and 2022, respectively. Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract.
The Company had $102.6 million and $84.9 million in stand-by letters of credit at December 31, 2024 and 2023, respectively. Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract.
The rate increased from 0.25% to 4.50% during 2022. 38 Table of Contents The amount of cash, federal funds sold and interest-bearing deposits with the Federal Reserve Bank carried by the Company is a function of the availability of funds presented to other institutions for clearing and the Company’s liquidity and interest rate sensitivity management.
The rate increased from 4.50% to 5.50% during 2023. 37 Table of Contents The amount of cash, federal funds sold and interest-bearing deposits with the Federal Reserve Bank carried by the Company is a function of the availability of funds presented to other institutions for clearing and the Company’s liquidity and interest rate sensitivity management.
The quantitative current expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, referencing the specific vintage’s initial balance.
The quantitative expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, as it references the specific vintage’s initial balance.
Noninterest expense included deposit insurance expense, which totaled $5.8 million for the year ended December 31, 2023, compared to $4.7 million for the year ended December 31, 2022 and $3.5 million for the year ended December 31, 2021. Income Taxes Income tax expense totaled $57.5 million in 2023, compared to $44.3 million in 2022 and $40.8 million in 2021.
Noninterest expense included deposit insurance expense, which totaled $6.4 million for the year ended December 31, 2024, compared to $5.8 million for the year ended December 31, 2023 and $4.7 million for the year ended December 31, 2022. Income Taxes Income tax expense totaled $58.9 million in 2024, compared to $57.5 million in 2023 and $44.3 million in 2022.
See Note (11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt. Short-Term Borrowings See Note (9) of the Notes to Consolidated Financial Statements for a discussion of short-term borrowings. Lines of Credit See Note (10) of the Notes to Consolidated Financial Statements for a discussion of the Company’s lines of credit.
Short-Term Borrowings See Note (9) of the Notes to Consolidated Financial Statements for a discussion of short-term borrowings. Lines of Credit See Note (10) of the Notes to Consolidated Financial Statements for a discussion of the Company’s lines of credit.
Net charge-offs were $3.4 million and $1.4 million for the years ended 2023 and 2022, respectively. The amount of net loan charge-offs is relatively low, equating to 0.05% and 0.02% of average total loans for the years ended December 31, 2023 and 2022, respectively.
Net charge-offs were $6.3 million and $3.4 million for the years ended 2024 and 2023, respectively. The amount of net loan charge-offs is relatively low, equating to 0.08% and 0.05% of average total loans for the years ended December 31, 2024 and 2023, respectively.
Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: • The impact of the Durbin Amendment of the Dodd-Frank Act ("Durbin Amendment") on noninterest income beginning July 1, 2023. • Potential impacts of the recent adverse developments in the banking industry driven by high-profile bank failures, including impacts on customer confidence, demand deposit outflows and the regulatory response thereto . • Recent deterioration in the market for commercial office property could have an adverse effect on the value of the Company's other real estate owned as well as commercial office collateral for the Company's commercial real estate loans. • Political pressures could further limit our ability to charge NSF and overdraft fees. • A continuing shift in deposit mix could negatively impact net interest margin. • Changes in interest rates. • The increased time, effort and non-interest expense related to ongoing and increased regulations from the Federal Reserve, the Consumer Financial Protection Bureau and the Securities and Exchange Commission (requirements related to environmental, social and governance issues and climate disclosure). • Local, regional, national and international economic conditions and the impact they may have on the Company and its customers. • Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs. • Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations. • Impairment of the Company’s goodwill or other intangible assets. • Changes in consumer spending, borrowing and savings habits. • Changes in the financial performance and/or condition of the Company’s borrowers, including the impact of rising interest rates. • Technological changes. • Cyber threats 28 Table of Contents • The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters. • The Company’s success at managing the risks involved in the foregoing items.
Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: • Potential impacts of the adverse developments in the banking industry driven by high-profile bank failures, including impacts on customer confidence, demand deposit outflows and the regulatory response thereto . • Deterioration in the market for commercial office property could have an adverse effect on the value of the Company's other real estate owned as well as commercial office collateral for the Company's commercial real estate loans. • Political pressures could further limit our ability to charge NSF and overdraft fees. • Further shift in deposit mix from noninterest-bearing deposits to interest-bearing deposits could negatively impact net interest margin. • Changes in interest rates. • The increased time and effort related to ongoing and/or changed regulations from regulatory bodies could negatively impact noninterest expense. • Local, regional, national and international economic conditions and the impact they may have on the Company and its customers. • Changes in the mix of loan sectors and types or the level of non-performing assets and charge-offs. • Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations. • Impairment of the Company’s goodwill or other intangible assets. • Changes in consumer spending, borrowing and savings habits. • Changes in the financial performance and/or condition of the Company’s borrowers, including the impact of higher interest rates. • Technological changes. • Cyber threats. 28 Table of Contents • The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters. • The Company’s success at managing the risks involved in the foregoing items.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. At December 31, 2023, the allowance for credit losses to total loans stood at 1.26% of total loans, compared to 1.33% at December 31, 2022, due to improved economic forecasts. The overall credit quality of the Company’s loan portfolio has remained strong.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. At December 31, 2024, the allowance for credit losses to total loans stood at 1.24% of total loans, compared to 1.26% at December 31, 2023. The overall credit quality of the Company’s loan portfolio has remained strong.
Certain reclassifications have been made to make prior periods comparable. This discussion and analysis should be read in conjunction with the Company's consolidated financial statements, notes thereto and other financial information appearing elsewhere in this report. From time to time, the Company has engaged in acquisitions. None of these acquisitions had a significant impact on the Company's consolidated financial statements.
This discussion and analysis should be read in conjunction with the Company's consolidated financial statements, notes thereto and other financial information appearing elsewhere in this report. From time to time, the Company has engaged in acquisitions. None of these acquisitions had a significant impact on the Company's consolidated financial statements.
Total uninsured deposits were $3.2 billion and $3.6 billion at December 31, 2023 and 2022, respectively, as calculated per regulatory guidance. This was approximately 30% and 33% of deposits at December 31, 2023 and 2022, respectively. Off-balance sheet sweep accounts totaled $4.3 billion at December 31, 2023, compared to $3.7 billion at December 31, 2022.
Total uninsured deposits were $4.0 billion and $3.2 billion at December 31, 2024 and 2023, respectively, as calculated per regulatory guidance. This was approximately 34% and 30% of deposits at December 31, 2024 and 2023, respectively. Off-balance sheet sweep accounts totaled $5.2 billion at December 31, 2024, compared to $4.3 billion at December 31, 2023.
For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure current expected credit losses on collateral-dependent financial assets. This amount is included in the allowance for credit losses.
For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure current expected credit losses on collateral-dependent financial assets. This amount is included in the allowance for credit losses. Each quarter the SLC reviews the aggregate allowance and adjusts the appropriateness of the allowance.
Loan fees included in interest income were $21.9 million for the year ended December 31, 2023 compared to $24.1 million for the year ended December 31, 2022 and $55.5 million for the year ended December 31, 2021.
Loan fees included in interest income were $20.8 million for the year ended December 31, 2024 compared to $21.9 million for the year ended December 31, 2023 and $24.1 million for the year ended December 31, 2022.
Other Real Estate Owned and Repossessed Assets Other real estate owned ("OREO") and repossessed assets decreased $2.7 million in 2023. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale.
Other Real Estate Owned and Repossessed Assets Other real estate owned ("OREO") and repossessed assets decreased $535,000 in 2024. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale.
The Company has continued to maintain the majority of its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period, which increased during 2023 from 4.50% to 5.50%.
The Company has continued to maintain the majority of its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period, which decreased during the last four months of 2024 from 5.40% to 4.40%.
The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits was 97.4% at December 31, 2023 and 98.1% December 31, 2022. Noninterest-bearing deposits to total deposits were 37.2% at December 31, 2023, compared to 45.1% at December 31, 2022.
The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits was 95.5% at December 31, 2024 and 97.4% December 31, 2023. Noninterest-bearing deposits to total deposits were 33.3% at December 31, 2024, compared to 37.2% at December 31, 2023.
At December 31, 2023, the allowance for credit losses as a percentage of nonaccrual loans was 393.9%, compared to 606.1%, at the end of 2022.
At December 31, 2024, the allowance for credit losses as a percentage of nonaccrual loans was 171.6%, compared to 393.9%, at the end of 2023.
For the Year Ended December 31, 2023 2022 2021 Rental income $ 11,224 $ 10,340 $ 9,975 Operating expense 10,868 9,863 8,727 The Company's total rental income and operating expenses from OREO are presented in the following table: For the Year Ended December 31, 2023 2022 2021 Rental income $ 11,801 $ 10,877 $ 10,298 Operating expense 11,429 10,450 9,169 43 Table of Contents Allowance for Credit Losses/Fair Value Adjustments on Acquired Loans The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model.
For the Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Rental income $ 12,148 $ 11,224 $ 10,340 Operating expense 10,078 10,868 9,863 The Company's total rental income and operating expenses from OREO are presented in the following table: For the Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Rental income $ 12,231 $ 11,801 $ 10,877 Operating expense 10,504 11,429 10,450 Allowance for Credit Losses/Fair Value Adjustments on Acquired Loans The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model.
See Note (6) of the Notes to Consolidated Financial Statements for disclosures regarding these investments. Liquidity and Funding The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers.
Liquidity and Funding The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers.
The effective tax rates for 2023, 2022 and 2021 were 21.3%, 18.7% and 19.6% respectively.
The effective tax rates for 2024, 2023 and 2022 were 21.4%, 21.3% and 18.7% respectively.
The acquired loans outstanding were $262.7 million and $263.5 million, at December 31, 2023 and 2022, respectively. Intangible Assets, Goodwill and Other Assets Identifiable intangible assets and goodwill totaled $199.0 million and $202.0 million at December 31, 2023 and December 31, 2022, respectively.
The acquired loans outstanding were $262.2 million and $262.7 million, at December 31, 2024 and 2023, respectively. Intangible Assets, Goodwill and Other Assets Identifiable intangible assets and goodwill totaled $195.4 million and $199.0 million at December 31, 2024 and December 31, 2023, respectively.
At January 1, 2024, BancFirst had approximately $145.7 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2023, BancFirst declared four common stock dividends totaling $61.7 million, two preferred stock dividends totaling $1.9 million and one special dividend totaling $50.0 million to BancFirst Corporation.
Dividends in excess of these limits require regulatory approval. At January 1, 2025, BancFirst had approximately $139.0 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2024, BancFirst declared four common stock dividends totaling $67.9 million, two preferred stock dividends totaling $1.9 million and one special dividend totaling $50.0 million to BancFirst Corporation.
Actual results may differ materially from forward-looking statements. SUMMARY The Company’s net income for 2023 was $212.5 million, or $6.34 per diluted share, compared to $193.1 million, or $5.77 per diluted share for 2022. In 2023, net interest income increased to $424.5 million, compared to $373.7 million in 2022.
Actual results may differ materially from forward-looking statements. SUMMARY The Company’s net income for 2024 was $216.4 million, or $6.44 per diluted share, compared to $212.5 million, or $6.34 per diluted share for 2023. In 2024, net interest income increased to $446.9 million, compared to $424.5 million in 2023.
The Company has the ability and intent to hold debt securities classified as available for sale that were in an unrealized loss position until they mature or until fair value exceeds amortized cost.
The Company’s practice is to maintain a liquid portfolio of debt securities and not engage in trading activities. The Company has the ability and intent to hold debt securities classified as available for sale that were in an unrealized loss position until they mature or until fair value exceeds amortized cost.
The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income in 2023 and 2022.
Changes in the volume of earning assets and interest-bearing liabilities and changes in interest rates, determine the changes in net interest income. The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income in 2024 and 2023.
In addition to net income of $212.5 million, other changes in stockholders’ equity during the year ended December 31, 2023 included $2.5 million related to common stock issuances for stock option exercises, $3.0 million related to stock-based compensation, and a $21.5 million increase in other comprehensive income, that were partially offset by $54.7 million in dividends and $1.8 million in the repurchase of company stock.
In addition to net income of $216.4 million, other changes in stockholders’ equity during the year ended December 31, 2024 included $9.2 million related to common stock issuances for stock option exercises, $3.5 million related to stock-based compensation, and a $17.2 million increase in other comprehensive income, that were partially offset by $58.9 million in dividends.
The Company’s nonaccrual loans are primarily commercial non-real estate loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected.
A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected.
Competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and off balance sheet sweep account products.
Quantitative tightening by the Federal Reserve and competition for deposits has increased, and available yields have similarly increased, causing noninterest-bearing deposits to move to interest-bearing deposits and off-balance-sheet sweep account products.
Impact of Deflation In a period of deflation, it would be reasonable to expect widely decreasing prices for real assets. In such an economic environment, assets of businesses and individuals, such as real estate, commodities or inventory, could decline.
Inflation can also have an impact on noninterest expenses such as salaries and employee benefits, occupancy, services and other costs. Impact of Deflation In a period of deflation, it would be reasonable to expect widely decreasing prices for real assets. In such an economic environment, assets of businesses and individuals, such as real estate, commodities or inventory, could decline.
In addition, the Company had debit card interchange fees totaling $37.6 million, $48.9 million and $46.0 million for the years 2023, 2022 and 2021, respectively. This represents 20.3%, 26.6% and 27.1% of the Company’s noninterest income for the years 2023, 2022 and 2021, respectively.
This represents 16.8%, 15.1%, and 14.2% of the Company’s noninterest income for the years 2024, 2023 and 2022, respectively. In addition, the Company had debit card usage and interchange fees totaling $26.8 million, $37.6 million and $48.9 million for the years 2024, 2023 and 2022, respectively.
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES The following table is a break-out of the allowance for credit losses: Year Ended December 31, 2023 2022 (Dollars in thousands) Real estate: Commercial real estate owner occupied $ 7,483 $ 6,416 Commercial real estate non-owner occupied 33,080 30,190 Construction and development 3,950 3,778 Construction residential real estate 3,414 3,275 Residential real estate first lien 4,914 4,092 Residential real estate all other 1,646 1,418 Agriculture 6,137 6,217 Commercial non-real estate 22,745 25,106 Consumer non-real estate 4,401 4,132 Oil and gas 9,030 8,104 Total $ 96,800 $ 92,728 The following table is a break-out of net charge-offs/(recoveries) and the break-out of the percent of average loans in each category: December 31, 2023 2022 Amount % of Avg Loans Amount % of Avg Loans (Dollars in thousands) Real estate: Commercial real estate owner occupied $ 854 0.01 % $ (487 ) 0.00 % Commercial real estate non-owner occupied 3 — — — Construction and development (5 ) — 81 — Construction residential real estate 94 — — — Residential real estate first lien 150 — 19 — Residential real estate all other 55 — (367 ) — Agriculture 369 0.01 192 — Commercial non-real estate 639 0.01 1,342 0.02 Consumer non-real estate 1,168 0.02 575 — Oil and gas 59 — — — Total $ 3,386 0.05 % $ 1,355 0.02 % 44 Table of Contents Fair Value Adjustments on Acquired Loans The fair value adjustment on acquired loans can consist of a credit component and a rate component to adjust for estimated credit exposures in the acquired loans.
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES The following table is a break-out of the allowance for credit losses: Year Ended December 31, 2024 2023 (Dollars in thousands) Real estate: Commercial real estate owner occupied $ 6,869 $ 7,483 Commercial real estate non-owner occupied 33,097 33,080 Construction and development 8,671 3,950 Construction residential real estate 2,336 3,414 Residential real estate first lien 4,568 4,914 Residential real estate all other 1,741 1,646 Agriculture 5,696 6,137 Commercial non-real estate 24,150 22,745 Consumer non-real estate 4,833 4,401 Oil and gas 7,536 9,030 Total $ 99,497 $ 96,800 43 Table of Contents The following table is a break-out of net charge-offs/(recoveries) and the break-out of the percent of average loans in each category: December 31, 2024 2023 Amount % of Avg Loans Amount % of Avg Loans (Dollars in thousands) Real estate: Commercial real estate owner occupied $ (70 ) 0.00 % $ 854 0.01 % Commercial real estate non-owner occupied 142 — 3 — Construction and development — — (5 ) — Construction residential real estate 3 — 94 — Residential real estate first lien 229 0.01 150 — Residential real estate all other 159 — 55 — Agriculture 123 — 369 0.01 Commercial non-real estate 3,952 0.05 639 0.01 Consumer non-real estate 1,677 0.02 1,168 0.02 Oil and gas 92 — 59 — Total $ 6,307 0.08 % $ 3,386 0.05 % Fair Value Adjustments on Acquired Loans The fair value adjustment on acquired loans can consist of a credit component and a rate component to adjust for estimated credit exposures in the acquired loans.
Deferred taxes are recognized under the balance sheet method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized. 30 Table of Contents The amount of accrued current and deferred income taxes is based on estimates of taxes due or receivable from taxing authorities either currently or in the future.
Deferred taxes are recognized under the balance sheet method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized.
In addition, net expense from other real estate owned increased $822,000, which was due to an increase of $3.2 million of write downs on other real estate owned and a $1.3 million increase in the cost of holding other real estate owned, offset by an increase in gain on the sales of other real estate owned of $3.6 million.
Net expense from other real estate owned decreased $2.9 million, which was due to a decrease of $1.2 million of write downs on other real estate owned, a $731,000 increase in the cost of holding other real estate owned, and a decrease in gain on the sales of other real estate owned of $924,000.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 24, 2023 (the “2022 Form 10-K”) for a discussion and analysis of the more significant factors that affected periods prior to 2022, which the Company incorporates by reference.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 27, 2024 (the “2023 Form 10-K”) for information about results of operations for 2023 compared with 2022, which the Company incorporates by reference.
The Company establishes an allowance as an estimate of the current expected credit losses in the loan portfolio at the balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio.
Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio.
The following is a summary of the accounting policies and estimates that management believes are the most critical. 29 Table of Contents Allowance for Credit losses On January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326, which replaced the incurred loss methodology for determining its provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as current expected credit loss ("CECL").
The following is a summary of the accounting policies and estimates that management believes are the most critical. 29 Table of Contents Allowance for Credit losses The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the current expected credit loss ("CECL") model.
The liquidity of BancFirst Corporation, however, is dependent upon dividend payments from BancFirst and its ability to obtain financing and or raise capital. Banking regulations limit bank dividends based upon net earnings retained by BancFirst and minimum capital requirements. Dividends in excess of these limits require regulatory approval.
This liquidity positions BancFirst to respond to increased loan demand and other requirements for funds, or to decreases in funding sources. The liquidity of BancFirst Corporation, however, is dependent upon dividend payments from BancFirst and its ability to obtain financing and or raise capital. Banking regulations limit bank dividends based upon net earnings retained by BancFirst and minimum capital requirements.
The Company’s Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. 47 Table of Contents See Note (15) of the Notes to Consolidated Financial Statements for a discussion of capital ratio requirements. See Note (11) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Subordinated Debt.
The Company’s trust preferred securities qualify as Tier 1 capital and its Subordinated Notes qualify as Tier 2 capital under bank regulatory guidelines. 46 Table of Contents See Note (15) of the Notes to Consolidated Financial Statements for a discussion of capital ratio requirements.
The Company purchased a total of $454.0 million of debt securities in 2023 compared to $1.9 billion of debt securities in 2022. The Company does not engage in securities trading activities. Any sales of debt securities are for the purpose of executing the Company’s asset/liability management strategy, eliminating a perceived credit risk in a specific security, or providing liquidity.
In addition, the Company had maturities and paydowns of debt securities totaling $742.3 million in 2024 and $469.0 million in 2023. The Company does not engage in securities trading activities. Any sales of debt securities are for the purpose of executing the Company’s asset/liability management strategy, eliminating a perceived credit risk in a specific security, or providing liquidity.
The process of determining the accruals for income taxes necessarily involves the exercise of considerable judgment and consideration of numerous subjective factors. Management performs an analysis of the Company’s tax positions annually and believes it is more likely than not that all of its tax positions will be utilized in future years.
Management performs an analysis of the Company’s tax positions annually and believes it is more likely than not that all of its tax positions will be utilized in future years.
Low Income Housing and New Market Tax Credit Investments The Company’s low income housing tax credit ("LIHTC") investments were $46.4 million and $24.7 million at December 31, 2023 and 2022, respectively and are included in other assets on the consolidated balance sheet.
The Company’s LIHTC investments were $58.6 million and $46.4 million at December 31, 2024 and 2023, respectively and are included in other assets on the consolidated balance sheet.
In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk.
In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year-end or that will be realized in the future.
Within One Year After One Year But Within Five Years After Five Years But Within Ten Years After Ten Years Total Amount Yield* Amount Yield* Amount Yield* Amount Yield* Amount Yield* (Dollars in thousands) Held for Investment Mortgage-backed securities $ 3 10.44 % $ 2 4.69 % $ — — % $ — — % $ 5 6.46 % State and political subdivisions 350 3.38 335 3.06 — — — — 685 3.22 Other securities — — 500 0.10 — — — — 500 0.10 Total $ 353 3.43 $ 837 1.29 $ — — $ — — $ 1,190 1.92 Percentage of total 29.7 % 70.3 % — % — % 100.0 % Available for Sale U.S.
Within One Year After One Year But Within Five Years After Five Years But Within Ten Years After Ten Years Total Amount Yield* Amount Yield* Amount Yield* Amount Yield* Amount Yield* (Dollars in thousands) Held for Investment Mortgage-backed securities $ 1 7.54 % $ 1 4.88 % $ — — % $ — — % $ 2 5.52 % State and political subdivisions 275 3.15 60 2.63 — — — — 335 3.05 Other securities 500 4.79 — — — — — — 500 4.79 Total $ 776 4.21 $ 61 2.67 $ — — $ — — $ 837 4.10 Percentage of total 92.7 % 7.3 % — % — % 100.0 % Available for Sale U.S.
Segment Information See Note (23) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s operating business segments. RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected the Company's financial condition as of December 31, 2023 and 2022 and results of operations for each of the years then ended.
RESULTS OF OPERATIONS The following discussion and analysis presents the more significant factors that affected the Company's financial condition as of December 31, 2024 and 2023 and results of operations for each of the years then ended.
The inability of customers to repay or refinance their loans could result in credit losses incurred by the Company far in excess of historical experience due to deflated collateral values. 37 Table of Contents FINANCIAL POSITION BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) At and for the Year Ended December 31, 2023 2022 Balance Sheet Data Total assets $ 12,372,042 $ 12,387,863 Debt securities 1,555,095 1,540,604 Total loans (net of unearned interest) 7,660,134 6,949,795 Allowance for credit losses 96,800 92,728 Deposits 10,700,122 10,974,228 Subordinated debt 86,101 86,044 Stockholders’ equity 1,433,891 1,250,836 Book value per share 43.54 38.05 Tangible book value per share (non-GAAP)(1) 37.50 31.90 Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) Stockholders’ equity $ 1,433,891 $ 1,250,836 Less goodwill 182,263 182,055 Less intangible assets, net 16,704 19,983 Tangible stockholders' equity (non-GAAP) $ 1,234,924 $ 1,048,798 Common shares outstanding 32,933,018 32,875,560 Tangible book value per share (non-GAAP) $ 37.50 $ 31.90 Selected Financial Ratios Performance Ratios: Return on average assets 1.75 % 1.56 % Return on average stockholders' equity 15.89 16.11 Cash dividends payout ratio 25.74 25.81 Net interest spread 2.42 2.93 Net interest margin 3.79 3.29 Efficiency ratio 54.51 55.60 Balance Sheet Ratios: Average loans to deposits 68.87 % 60.06 % Average earning assets to total assets 92.93 91.63 Average stockholders’ equity to average assets 11.03 9.67 Asset Quality Ratios: Nonaccrual loans to total loans 0.32 % 0.22 % Allowance for credit losses to total loans 1.26 1.33 Allowance for credit losses to nonaccrual loans 393.92 606.10 Net charge-offs to average loans 0.05 0.02 (1) Refer to the "Reconciliation of Tangible Book Value per Common Share (non-GAAP)" Table (2) Tangible book value per common share is stockholders' equity less goodwill and intangible assets, net, divided by common shares outstanding.
The inability of customers to repay or refinance their loans could result in credit losses incurred by the Company far in excess of historical experience due to deflated collateral values. 36 Table of Contents FINANCIAL POSITION BANCFIRST CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share data) At and for the Year Ended December 31, 2024 2023 Balance Sheet Data Total assets $ 13,554,314 $ 12,372,042 Debt securities 1,211,754 1,555,095 Total loans (net of unearned interest) 8,033,183 7,660,134 Allowance for credit losses 99,497 96,800 Deposits 11,718,546 10,700,122 Subordinated debt 86,157 86,101 Stockholders’ equity 1,621,187 1,433,891 Book value per share 48.81 43.54 Tangible book value per share (non-GAAP)(1) 42.92 37.50 Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) Stockholders’ equity $ 1,621,187 $ 1,433,891 Less goodwill 182,263 182,263 Less intangible assets, net 13,158 16,704 Tangible stockholders' equity (non-GAAP) $ 1,425,766 $ 1,234,924 Common shares outstanding 33,216,519 32,933,018 Tangible book value per share (non-GAAP) $ 42.92 $ 37.50 Selected Financial Ratios Balance Sheet Ratios: Average loans to deposits 71.50 % 68.87 % Average earning assets to total assets 92.91 92.93 Average stockholders’ equity to average assets 11.78 11.03 Asset Quality Ratios: Nonaccrual loans to total loans 0.72 % 0.32 % Allowance for credit losses to total loans 1.24 1.26 Allowance for credit losses to nonaccrual loans 171.59 393.92 Net charge-offs to average loans 0.08 0.05 (1) Refer to the "Reconciliation of Tangible Book Value per Common Share (non-GAAP)" Table (2) Tangible book value per common share is stockholders' equity less goodwill and intangible assets, net, divided by common shares outstanding.
Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of current expected credit losses could also change, which could affect the amount of future provisions for credit losses.
Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change which could affect the amount of future provisions for credit losses. Net loan charge-offs were $6.3 million for 2024 compared to $3.4 million for 2023 and $1.4 million for 2022.
The decrease in interchange fees in 2023 was due to the impact of the Durbin Amendments with took effect for the Company on July 1, 2023. The Company is subject to political pressures that could limit our ability to charge NSF and overdraft fees. As of April 1, 2022, the Company lowered the rates charged on NSF and overdraft fees.
The Company is subject to political pressures that could limit our ability to charge for NSF and overdraft fees and could adversely impact our noninterest income. On April 1, 2022, the Company lowered the rates charged on NSF and overdraft fees. The Company also became subject to the reduced interchange fees under the Durbin Amendment, effective July 1, 2023.
Balances of these items can fluctuate widely based on these various factors. The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks decreased by $773.0 million, or 24.4%, to $2.4 billion, from December 31, 2022 to December 31, 2023.
Balances of these items can fluctuate widely based on these various factors. The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increased by $1.2 billion, or 48.2%, to $3.6 billion, from December 31, 2023 to December 31, 2024. The increase was related to an increase of interest-bearing deposits in addition to maturing securities.
December 31, 2023 2022 (Dollars in thousands) Past due 90 days or more and still accruing $ 9,542 $ 7,085 Nonaccrual (1) 24,573 15,299 Total nonperforming loans 34,115 22,384 Other real estate owned and repossessed assets 34,200 36,936 Total nonperforming assets $ 68,315 $ 59,320 (1) Government agencies guarantee approximately $6.7 million of nonaccrual loans at December 31, 2023, and $4.7 million at December 31, 2022. 42 Table of Contents Nonaccrual Loans Nonaccrual loans totaled $24.6 million at December 31, 2023, compared to $15.3 million at December 31, 2022.
December 31, 2024 2023 (Dollars in thousands) Past due 90 days or more and still accruing $ 7,739 $ 9,542 Nonaccrual (1) 57,984 24,573 Total nonperforming loans 65,723 34,115 Other real estate owned and repossessed assets 33,665 34,200 Total nonperforming assets $ 99,388 $ 68,315 (1) Government agencies guarantee approximately $9.0 million of nonaccrual loans at December 31, 2024, and $6.7 million at December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+1 added−2 removed9 unchanged
Biggest changeThese simulations incorporate assumptions regarding changes in interest rates and the maturity and repricing of earning assets and interest-bearing liabilities. The ALCO uses gap analysis to monitor interest rate sensitivity based on the maturity and repricing frequencies of its earning assets and interest-bearing liabilities.
Biggest changeThese simulations incorporate assumptions regarding changes in interest rates and the maturity and repricing of earning assets and interest-bearing liabilities. The ALCO uses gap analysis to monitor interest rate sensitivity based on the maturity and repricing frequencies of its earning assets and interest-bearing liabilities. The ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities.
The following table presents the Company’s financial instruments that are sensitive to changes in interest rates, their expected maturities and their estimated fair values at December 31, 2023. Avg.
The following table presents the Company’s financial instruments that are sensitive to changes in interest rates, their expected maturities and their estimated fair values at December 31, 2024. Avg.
The actual maturities and principal repayments for the financial instruments could vary substantially from the contractual terms and assumptions used in the analysis. 49 Table of Contents
The actual maturities and principal repayments for the financial instruments could vary substantially from the contractual terms and assumptions used in the analysis. 48 Table of Contents
Conversely, the model simulation projected that a decrease in interest rates of 100 basis points would result in a positive variance in net interest income of 1.90% relative to the base case over the next twelve months.
Conversely, the model simulation projected that a decrease in interest rates of 100 basis points would result in a negative variance in net interest income of 6.91% relative to the base case over the next twelve months.
The ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.
The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.
As of December 31, 2023, the model simulations projected that a 100 and 200 basis point increase would result in negative variance in net interest income of 1.98% and 3.90%, respectively, relative to the base case over the next 12 months.
As of December 31, 2024, the model simulations projected that a 100 and 200 basis point increase would result in positive variance in net interest income of 4.32% and 8.77%, respectively, relative to the base case over the next 12 months.
Removed
This analysis indicates that the Company’s position is liability-sensitive with a negative gap of $711 million for the zero to 12-month interval at December 31, 2023, which was 5.75% of total assets, compared to and asset-sensitive position and a positive gap of $327 million for the zero to 12-month interval at December 31, 2022, which was 2.64% of total assets.
Added
Expected Maturity / Principal Repayments at December 31, Rate 2025 2026 2027 2028 2029 Thereafter Balance Fair Value (Dollars in thousands) Interest Sensitive Assets Loans held for investment 6.96 % $ 3,838,872 $ 1,197,887 $ 1,022,146 $ 579,398 $ 475,235 $ 911,572 $ 8,025,110 $ 8,742,915 Debt securities 2.37 335,884 308,601 328,107 251,825 249 30,139 1,254,805 1,211,754 Federal funds sold and interest-bearing deposits 5.27 3,316,647 — — — — — 3,316,647 3,316,647 Interest Sensitive Liabilities Savings and interest-bearing deposits 3.58 6,341,347 — — — — — 6,341,347 6,357,925 Time deposits 4.54 1,302,319 102,796 28,714 21,919 14,316 75 1,470,139 1,467,772 Subordinated debt 4.77 — — — — — 86,157 86,157 77,998 Off-Balance Sheet Items Loan commitments — — — — — — — 4,313 Letters of credit — — — — — — — 769 The expected maturities and principal repayments are based upon the contractual terms of the instruments.
Removed
Expected Maturity / Principal Repayments at December 31, Rate 2024 2025 2026 2027 2028 Thereafter Balance Fair Value (Dollars in thousands) Interest Sensitive Assets Loans held for investment 6.42 % $ 3,300,811 $ 1,043,448 $ 985,540 $ 675,982 $ 525,171 $ 1,125,693 $ 7,656,645 $ 7,453,568 Debt securities 2.35 348,668 336,836 307,718 327,543 252,272 47,573 1,620,610 1,555,095 Federal funds sold and interest-bearing deposits 5.10 2,173,317 — — — — — 2,173,317 2,173,317 Interest Sensitive Liabilities Savings and interest-bearing deposits 3.15 5,756,269 — — — — — 5,756,269 6,005,467 Time deposits 2.91 774,008 120,976 27,347 17,093 22,199 4 961,627 958,851 Short-term borrowings 4.84 3,351 — — — — — 3,351 3,351 Subordinated debt 4.79 — — — — — 86,101 86,101 79,271 Off Balance Sheet Items Loan commitments — — — — — — — 4,875 Letters of credit — — — — — — — 637 The expected maturities and principal repayments are based upon the contractual terms of the instruments.

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