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What changed in BANCFIRST CORP /OK/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BANCFIRST CORP /OK/'s 2022 and 2023 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 2023 report.

+258 added−236 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-24)

Top changes in BANCFIRST CORP /OK/'s 2023 10-K

258 paragraphs added · 236 removed · 200 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

77 edited+25 added−7 removed272 unchanged
Biggest changeIn October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including NASDAQ, to implement listing standards that require listed companies to adopt policies 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 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.
BancFirst is chartered by the State of Oklahoma and at the state level is supervised and regulated by the Oklahoma State Banking Department under the Oklahoma Banking Code. Pegasus and Worthington are chartered by the State of Texas and at the state level are supervised and regulated by the Texas Department of Banking.
BancFirst is chartered by the State of Oklahoma and at the state level is supervised and regulated by the Oklahoma Banking Department under the Oklahoma Banking Code. Pegasus and Worthington are chartered by the State of Texas and at the state level are supervised and regulated by the Texas Department of Banking.
Changes in market interest rates either could positively or negatively affect our net interest income and our profitability, depending on the magnitude, direction and duration of the change. If interest rates decline, our net interest margin could experience compression.
Changes in market interest rates could either positively or negatively affect our net interest income and our profitability, depending on the magnitude, direction and duration of the change. If interest rates decline, our net interest margin could experience compression.
If, as a result of an examination of a bank, the Oklahoma State Banking Department 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 Oklahoma State Banking Department.
If, as a result of an examination of a bank, the Oklahoma Banking Department 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 Oklahoma Banking Department.
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.
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.
In June 2023, the Federal Trade Commission's amendments to the Gramm-Leach-Bliley Act's Safeguards Rule will go 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.
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.
Changes in the level of interest rates, a prolonged unfavorable interest rate environment or a decrease in our level of deposits that increases our cost of funds could negatively affect our profitability and financial condition. 18 Table of Contents Acquisition Related Risk There can be no assurance that the integration of our acquisitions will be successful or will not result in unforeseen difficulties that may absorb significant management attention.
Changes in the level of interest rates, a prolonged unfavorable interest rate environment or a decrease in our level of deposits that increases our cost of funds could negatively affect our profitability and financial condition. 19 Table of Contents Acquisition Related Risk There can be no assurance that the integration of our acquisitions will be successful or will not result in unforeseen difficulties that may absorb significant management attention.
Our asset-liability management strategy, which is designed to mitigate our risk from changes in market interest rates, may not be able to mitigate changes in interest rates from having a material adverse effect on our results of operations and financial condition. Credit and Lending Risks We may be adversely affected by declining crude oil prices.
Our asset-liability management strategy, which is designed to mitigate our risk from changes in market interest rates, may not be able to mitigate changes in interest rates from having a material adverse effect on our results of operations and financial condition. Credit and Lending Risks We may be adversely affected by declining crude oil and natural gas prices.
A public trading market having the desired characteristics of 21 Table of Contents 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.
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.
The Company believes that, as of December 31, 2022, 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, 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.
However, Texas banking law specifically empowers a state-chartered bank 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 Commissioner or the Texas Finance Commission.
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 20 Table of Contents 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.
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.
During 2016, the U.S. financial regulators, including the Federal Reserve Board and the SEC, proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets (which would include the Company, BancFirst and Pegasus).
In April 2016, the U.S. financial regulators, including the Federal Reserve Board and the SEC, proposed revised rules on incentive-based payment arrangements at specified regulated entities having at least $1 billion in total assets (which would include the Company, BancFirst and Pegasus).
The GLB Act provides that state nonmember banks, such as BancFirst, Pegasus and Worthington, may invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law), subject to the same conditions that apply to national bank investments in financial subsidiaries.
The GLB Act provides that state member banks, such as BancFirst, Pegasus and Worthington, may invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law), subject to the same conditions that apply to national bank investments in financial subsidiaries.
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.
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.
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.
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.
Furthermore, a prolonged period of low oil prices could also have a negative impact on the energy producing economies and, in particular, the economies of states such as Oklahoma and Texas, where the energy industry is a significant driver of economic activity.
Furthermore, a prolonged period of low oil and natural gas prices could also have a negative impact on the energy producing economies and, in particular, the economies of states such as Oklahoma and Texas, where the energy industry is a significant driver of economic activity.
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, 2023.
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.
In November 2021, federal banking regulators, 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.
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.
If oil prices drop below the marginal cost of production for an extended period, we would expect to experience weaker energy loan demand and increased losses within our energy portfolio.
If oil and natural gas prices drop below the marginal cost of production for an extended period, we would expect to experience weaker energy loan demand and increased losses within our energy portfolio.
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.
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.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order 9 Table of Contents or condition imposed by the FDIC or written agreement entered into with the FDIC.
Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC.
General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of our operating results. 22 Table of Contents General Risk Factors We rely on certain external vendors.
General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of our operating results. General Risk Factors We rely on certain external vendors.
If management’s judgments later prove to have been inaccurate, we may experience unexpected losses that could be substantial. 19 Table of Contents Additionally, the processes we use to estimate our probable 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.
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.
Depositor Preference The FDI Act provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative 13 Table of Contents expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
Depositor Preference The FDI Act provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution.
We do not have employment or non-compete agreements 23 Table of Contents with these key employees. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.
We do not have employment or non-compete agreements with these key employees. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.
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.
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.
Financial services institutions are interrelated because of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, 17 Table of Contents including commercial banks, brokers and dealers, investment banks and other institutional clients.
Financial services institutions are interrelated because of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients.
Banking institutions with a ratio of CET1 to risk-weighted assets below 7 Table of Contents 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.
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.
In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to 16 Table of Contents detect all potential environmental hazards.
In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential environmental hazards.
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, 2022, the Company employed 2,051 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, 2023, the Company employed 2,109 full time equivalent employees. None of its employees are represented by collective bargaining agreements.
As reported by the Federal Deposit Insurance Corporation (“FDIC”), the Company’s market share of deposits within the state of Oklahoma was 7.19% as of June 30, 2022 and 6.92% as of June 30, 2021. 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 6.86% 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.
The FDIA provides that an institution may be reclassified if the appropriate federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.
The FDI Act provides that an institution may be reclassified if the appropriate federal banking agency determines (after notice and opportunity for hearing) that the institution is in an unsafe or unsound condition or deems the institution to be engaging in an unsafe or unsound practice.
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, 2022, this percentage was approximately 67%.
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%.
The major areas of 3 Table of Contents competition include interest rates charged on loans, underwriting terms and conditions, interest rates paid on deposits, fees on non-credit services, levels of service charges on deposits, completeness of product lines and quality of service.
The major areas of competition include interest rates charged on loans, underwriting terms and conditions, interest rates paid on deposits, fees on non-credit services, levels of service charges on deposits, completeness of product lines and quality of service.
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 State 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.
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.
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.
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.
Although as of December 31, 2022, oil and gas loans comprised 6.66% of our loan portfolio, the impact of lower oil 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, 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.
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, 2022, debit card interchange revenue represented 26.6% 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, 2023, debit card interchange revenue represented 20.3% of our noninterest income.
A significant portion of our noninterest income is derived from service charge income, including NSF fees, which represented 14.2% of our noninterest income for the year ended December 31, 2022. 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 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.
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 $4.7 million, $3.5 million and $2.1 million in 2022, 2021 and 2020, 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. 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.
Pursuant to the Durbin Amendment of the Dodd-Frank Act this will trigger a reduction of annual pretax income from debit card interchange fees beginning July 1, 2023. Additional information regarding the Durbin Amendment is presented in Item 1A. Risk Factors.
Pursuant to the Durbin Amendment of the Dodd-Frank Act this triggered a reduction of annual pretax income from debit card interchange fees that began July 1, 2023. Additional information regarding the Durbin Amendment is presented in Item 1A. Risk Factors.
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.
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.
The Company currently has 106 banking locations serving 59 communities throughout Oklahoma, Pegasus has 3 banking locations in the Dallas Metroplex area and Worthington has 4 locations in the Dallas-Fort Worth Metroplex area.
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.
In addition, we are subject to political pressures that could limit our ability to charge for NSF and overdraft fees. In addition, the Durbin Amendment is a provision in the larger Dodd-Frank Act that gave the Federal Reserve the authority to establish rates on debit card transactions.
In addition, we are subject to political pressures that could limit our ability to charge NSF and overdraft fees. In addition, the Durbin Amendment is a provision in the larger Dodd-Frank Act that gave the Federal Reserve the authority to establish rates on debit card transactions. The Durbin Amendment aims to control debit card interchange fees and restrict anti-competitive practices.
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.
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.
As state nonmember banks, Pegasus and Worthington are subject to primary supervision, periodic examination and regulation by the Texas Department of Banking and the FDIC, and Texas law provides that Pegasus and Worthington must maintain reserves against deposits as required by the FDI Act.
As state member banks, Pegasus and Worthington are subject to primary supervision, periodic examination and regulation by the Texas Department of Banking and the Federal Reserve Bank of Dallas, and Texas law provides that Pegasus and Worthington must maintain reserves against deposits as required by the FDI Act.
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.
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.
Our directors and executive officers, as a group, beneficially owned 33.75% of our outstanding common stock as of January 31, 2023.
Our directors and executive officers, as a group, beneficially owned 33.55% of our outstanding common stock as of January 31, 2024.
Further, to the extent that any of the information contained in this report constitutes forward-looking 15 Table of Contents 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.
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.
The Durbin Amendment aims to control debit card interchange fees and restrict anti-competitive practices. The law applies to banks with over $10 billion in assets and limits these banks on what they charge for debit card interchange fees. The Company exceeded $10 billion in total assets at December 31, 2022.
The law applies to banks with over $10 billion in assets and limits these banks on what they charge for debit card interchange fees. The Company exceeded $10 billion in total assets at December 31, 2022.
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.
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.
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.
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.
Durbin Amendment The Durbin Amendment is part of the Dodd-Frank Act that limits transaction fees imposed upon merchants by debit card issuers. Interchange fees or "debit card swipe fees" are paid to banks by acquirers for the privilege of accepting payment cards . The Company exceeded $10 billion in total assets at December 31, 2022.
Durbin Amendment The Durbin Amendment is part of the Dodd-Frank Act that limits transaction fees imposed upon merchants by debit card issuers. Interchange fees or "debit card swipe fees" are paid to banks by acquirers for the privilege of accepting payment cards .
It cannot be determined at this time whether compliance with such policies will adversely affect the ability of the Company, BancFirst, Pegasus and Worthington to hire, retain and motivate key employees. Cybersecurity Federal regulators have issued statements regarding cybersecurity.
The scope, content and application of the U.S. banking regulators' policies on incentive compensation continue to evolve. It cannot be determined at this time whether compliance with such policies will adversely affect the ability of the Company, BancFirst, Pegasus and Worthington to hire, retain and motivate key employees. Cybersecurity Federal agencies have issued statements regarding cybersecurity.
The Texas Department of Banking is authorized by statute to accept an FDIC examination in lieu 14 Table of Contents of a state examination. In practice, the FDIC and the Texas Department of Banking alternate examinations.
The Texas Department of Banking is authorized by statute to accept a Federal Reserve Bank examination in lieu of a state examination. In practice, the Federal Reserve Bank of Dallas and the Texas Department of Banking alternate examinations.
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.
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.
In addition to the provisions of the GLB Act that authorize state nonmember 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.
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.
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.
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”).
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. The Company is particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States.
The Company is particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States.
The policies of the Federal Reserve Board may have a material effect on the Company’s business, results of operations and financial condition. 11 Table of Contents Privacy Provisions of the GLB Act Federal banking regulators, as required under the GLB Act, have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties.
Privacy Provisions of the GLB Act Federal banking regulators, as required under the GLB Act, have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties.
As a state nonmember bank, BancFirst is subject to primary supervision, periodic examination and regulation by the Oklahoma State Banking Board and the FDIC, and Oklahoma law provides that BancFirst must maintain reserves against deposits as required by the FDI Act. The Oklahoma Banking Commissioner is authorized by statute to accept an FDIC examination in lieu of a state examination.
As a state member bank, BancFirst is subject to primary supervision, periodic examination and regulation by the Oklahoma Banking Department and the Federal Reserve Bank of Kansas City, and Oklahoma law provides that BancFirst must maintain reserves against deposits as required by the FDI Act.
Pursuant to the Durbin Amendment, based on current run rates, this will trigger a reduction of annual pretax income from debit card interchange fees of approximately $22 million beginning July 1, 2023. We have businesses other than banking.
Pursuant to the Durbin Amendment of the Dodd-Frank Act, which began to apply to the Company on July 1, 2023, based on current run rates, annual pretax income from debit card interchange fees will be reduced by approximately $23 million. We have businesses other than banking.
These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits.
These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the Federal Reserve Board may have a material effect on the Company’s business, results of operations and financial condition.
A bank’s capital category is determined solely for applying prompt corrective action regulations, and the capital category may not constitute an accurate representation of the bank’s overall financial condition or prospects for other purposes. 8 Table of Contents The FDI Act generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan.
The FDI Act generally prohibits a depository institution from making any capital distributions (including payment of a dividend) or paying any management fee to its parent holding company if the depository institution would thereafter be “undercapitalized.” “Undercapitalized” institutions are subject to growth limitations and are required to submit a capital restoration plan.
In general, these regulations require that any such transaction by a financial institution with an affiliate must be secured by designated amounts of specified collateral and must be limited to certain thresholds on an individual and aggregate basis. 6 Table of Contents Federal law also limits a bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons.
In general, these regulations require that any such transaction by a financial institution with an affiliate must be secured by designated amounts of specified collateral and must be limited to certain thresholds on an individual and aggregate basis.
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.
We realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings.
The Company is committed to a policy of consistent treatment and equal employment opportunity in all recruitment and employment practices and is an affirmative action employer. Market Areas and Competition The banking environment in Oklahoma is very competitive. The geographic dispersion of the BancFirst’s banking locations presents several different levels and types of competition.
The Company is committed to a policy of consistent treatment and equal employment opportunity in all recruitment and employment practices and is an affirmative action employer.
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.
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, 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.
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.
A portion of these banks and other financial institutions have substantially greater resources and lending limits, larger branch systems and other banking services that we do not offer. To a limited extent, we also compete with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies.
We face vigorous competition from banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. A portion of these banks and other financial institutions have substantially greater resources and lending limits, larger branch systems and other banking services that we do not offer.
When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or credit terms prevalent in that market. This competition may reduce or limit our margins on banking and trust services, reduce our market share and adversely affect our results of operations and financial condition.
To a limited extent, we also compete with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies. When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or credit terms prevalent in that market.
The Company will continue to evaluate the impact of any changes to the regulations implementing the CRA. 12 Table of Contents 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.
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.
BancFirst, Pegasus and Worthington have elected not to be members of the Federal Reserve System and, consequently, are supervised and regulated by the FDIC at the federal level. Their deposits are insured by the Deposit Insurance Fund (“DIF”) of the FDIC to the extent provided by law.
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.
In practice, the FDIC and the Oklahoma State Banking Department alternate examinations of BancFirst.
The Oklahoma Banking Commissioner is authorized by statute to accept a Federal Reserve Bank examination in lieu of a state examination. In practice, the Federal Reserve Bank of Kansas City and the Oklahoma Banking Department alternate examinations of BancFirst.
Any such losses could have a material adverse effect on our financial condition and results of operations. Competition with other financial institutions could adversely affect our profitability. We face vigorous competition from banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions.
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.
Recent years have been marked by significant volatility in market oil prices. As of December 31, 2022, the price per barrel of crude oil was approximately $78 up from $73 at December 31, 2021.
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.
Removed
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.
Added
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.
Removed
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”).

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Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−0 removed2 unchanged
Biggest changeThe Company’s wholly-owned subsidiary, Worthington has one banking location in Arlington, Texas, one in Colleyville, Texas and two in Fort Worth, Texas. The main bank is located at 200 W Main St, Arlington, TX 76010. (See Note 6 - “Premises and Equipment, Net and Other Assets” to the Consolidated Financial Statements for further information on the Company’s properties).
Biggest changeThe Company’s wholly-owned subsidiary, Worthington has one banking location in Arlington, Texas, one in Colleyville, Texas, one in Denton, Texas and two in Fort Worth, Texas. The main bank is located at 200 W Main St, Arlington, TX 76010.
Added
(See Note 6 - “Premises and Equipment, Net and Other Assets” to the Consolidated Financial Statements for further information on the Company’s properties).

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−0 removed4 unchanged
Biggest changeSee “Liquidity and Funding” and “Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Item 1 - Business-Supervision and Regulation.” and Note (15) of the Notes to Consolidated Financial Statements for further information regarding limitations on the payment of dividends by BancFirst Corporation and BancFirst. 24 Table of Contents Stock Repurchases In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”).
Biggest changeSee “Liquidity and Funding” and “Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Item 1 - Business-Supervision and Regulation.” and Note (15) of the Notes to Consolidated Financial Statements for further information regarding limitations on the payment of dividends by BancFirst Corporation and BancFirst.
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, 2022.
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.
Equity Compensation Plan Information Information regarding stock-based compensation awards outstanding and available for future grants as of December 31, 2022 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, 2023 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, 2023, there were 244 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, 2024, there were 228 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 1,439,899 $ 50.92 106,288 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 1,393,041 $ 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.
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, 2022, up to 500,486 shares could be repurchased under the Company’s November 1999 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, 2023, up to 479,784 shares could be repurchased under the Stock Repurchase Program.
Added
Stock Repurchases The Company has adopted a Stock Repurchase Program (the “SRP”).

Item 7. Management's Discussion & Analysis

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

110 edited+30 added−29 removed62 unchanged
Biggest changeFactors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: • The Durbin Amendment will impact noninterest income beginning July 1, 2023. • Political pressures could further limit our ability to charge for NSF and overdraft fees. • Rising interest rates. • The increased noninterest expense associated with greater Securities and Exchange Commission's requirements related to environmental, social and governance (ESG) issues, as well as climate disclosures. • Local, regional, national and international economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact. • 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. • The effect of changes in laws and regulations such as those from the Consumer Financial Protection Bureau, Federal Reserve, and the Federal Deposit Insurance Corporation (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company must comply. • 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. • Acquisitions and integration of acquired businesses. • 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 cost and expenses of the foregoing items. 26 Table of Contents Actual results may differ materially from forward-looking statements.
Biggest changeFactors 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.
The SLC establishes a qualitative adjustment for each loan pool using these factors. For periods beyond which BancFirst can make or obtain reasonable and supportable forecasts of expected credit losses, BancFirst reverts to historical loss information. Each quarter the SLC reviews aggregate allowance for BancFirst and adjusts the appropriateness of the allowance.
The SLC establishes a qualitative adjustment for each loan pool using these factors. For periods beyond which BancFirst can make or obtain reasonable and supportable forecasts of current expected credit losses, BancFirst reverts to historical loss information. Each quarter the SLC reviews aggregate allowance for BancFirst and adjusts the appropriateness of the allowance.
The Company’s nonaccrual loans are primarily commercial and agricultural non-real estate. 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.
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.
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 $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.
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.
The allowance for credit losses is management’s estimate of the expected credit losses on financial assets measured at amortized cost. The allowance for credit losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs.
The allowance for credit losses is management’s estimate of the current expected credit losses on financial assets measured at amortized cost. The allowance for credit losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs.
For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure 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.
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. 28 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. 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.
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, referencing the specific vintage’s initial balance.
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.
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. 29 Table of Contents Future Application of Accounting Standards See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements and their expected impact on the Company’s consolidated financial statements.
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. 31 Table of Contents Future Application of Accounting Standards See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements and their expected impact on the Company’s consolidated financial statements.
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 2023. 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 2024. Related Party Transactions See Note (18) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s related party transactions.
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, 2022 and 2021 and results of operations for each of the years then ended.
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.
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, 2022, 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, 2023, management had no intent or requirement to sell before the recovery of the unrealized loss.
Changes in these accruals are reported as tax expense, and involve estimates of the various components included in determining taxable income, tax credits, other taxes and temporary differences. Changes periodically occur in the estimates due to changes in tax rates, tax laws and regulations and implementation of new tax planning strategies.
Changes in these accruals are reported as tax expense or benefits, and involve estimates of the various components included in determining taxable income, tax credits, other taxes and temporary differences. Changes periodically occur in the estimates due to changes in tax rates, tax laws and regulations and implementation of new tax planning strategies.
Any impairment losses are reported in the consolidated statement of comprehensive income. The evaluation of remaining core deposit intangibles for possible impairment involves reassessing the useful lives and the recoverability of the intangible assets. The evaluation of the useful lives is performed by reviewing the levels of core deposits of the respective branches acquired.
Any impairment losses are reported in the consolidated statements of comprehensive income. The evaluation of remaining core deposit intangibles for possible impairment involves reassessing the useful lives and the recoverability of the intangible assets. The evaluation of the useful lives is performed by reviewing the levels of core deposits of the respective branches acquired.
The Company’s Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. 45 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 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.
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, 2022.
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.
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, 2022 and 2021 resulted in no impairments.
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 following is a summary of the accounting policies and estimates that management believes are the most critical. 27 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 ("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 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 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. 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, for the periods indicated, certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities.
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. 46 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. 48 Table of Contents
Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded at cost but is adjusted periodically to record as 43 Table of Contents income the bank’s proportionate share of the investee’s earnings or losses and decreased by the amount of cash dividends or similar distributions received from the investee.
Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded at cost but is adjusted periodically to record as income the bank’s proportionate share of the investee’s earnings or losses and decreased by the amount of cash dividends or similar distributions received from the investee.
As of December 31, 2022, 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, 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.
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 $1.3 million for 2022, $2.2 million for 2021 and $2.8 million for 2020.
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.
No shares were repurchased for the year ended December 31, 2022. For the year ended December 31, 2021, the Company repurchased 212,296 shares of its common stock for $11.7 million at an average price of $54.94 per share under the SRP.
For the year ended December 31, 2021, the Company repurchased 212,296 shares of its common stock for $11.7 million at an average price of $54.94 per share under the SRP.
Other assets includes the cash surrender value of key-man life insurance policies totaling $82.7 million at December 31, 2022 and $81.4 million at December 31, 2021. Equity securities are reported in other assets on the balance sheet. The Company invests in equity securities without readily determinable fair values.
Other assets includes the cash surrender value of key-man life insurance policies totaling $84.4 million at December 31, 2023 and $82.7 million at December 31, 2022. Equity securities are reported in other assets on the balance sheet. The Company invests in equity securities without readily determinable fair values.
Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income. 41 Table of Contents 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. 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. 37 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, 2022.
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.
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. 39 Table of Contents The following table presents the maturity distribution of loans held for investment at December 31, 2022.
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.
The credit component of the adjustment was a $2.2 million discount at December 31, 2022 and a $1.1 million discount at December 31, 2021. The rate component was $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 $1.6 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.
Many of the loans with maturities of one year or less are renewed at existing or similar terms after scheduled principal reductions. Also, approximately 56% of loans had adjustable interest rates at December 31, 2022.
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.
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 25, 2022 (the “2021 Form 10-K”) for a discussion and analysis of the more significant factors that affected periods prior to 2021, 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 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.
During the year ended December 31, 2022, the Company had a loss of $4.0 million resulting from the sale of $226 million of debt securities with an average yield of 0.16%, which was subsequently reinvested in $220 million of debt securities with an average yield of 1.86%. The Company also made two other purchases of debt securities in 2022.
During the year ended December 31, 2022, the Company had a loss of $4.0 million resulting from the sale of $226 million of debt securities with an average yield of 0.16%, which was subsequently reinvested in $220 million of debt securities with an average yield of 1.86%.
The Company’s average stockholders’ equity to average assets for 2022 was 9.67% compared to 10.32% for 2021. The Company’s leverage ratio and total risk-based capital ratios at December 31, 2022 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 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 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 2022 from 0.25% to 4.50%.
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 increased during 2023 from 4.50% to 5.50%.
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, 2022, up to 500,486 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, 2023, up to 479,784 shares could be repurchased under the SRP.
In addition, the Company had debit card interchange fees totaling $48.9 million, $46.0 million and $36.9 million for the years 2022, 2021 and 2020, respectively. This represents 26.6%, 27.1% and 26.9% of the Company’s noninterest income for the years 2022, 2021 and 2020, respectively.
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.
At 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 compared to approximately 95% at December 31, 2021.
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.
Noninterest expense included deposit insurance expense, which totaled $4.7 million for the year ended December 31, 2022, compared to $3.5 million for the year ended December 31, 2021 and $2.1 million for the year ended December 31, 2020. Income Taxes Income tax expense totaled $44.3 million in 2022, compared to $40.8 million in 2021 and $23.9 million in 2020.
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.
The balance of equity securities was $15.5 million at December 31, 2022 and $10.6 million at December 31, 2021. The Company reviews its portfolio of equity securities for impairment at least quarterly.
The balance of equity securities was $13.1 million at December 31, 2023 and $15.5 million at December 31, 2022. The Company reviews its portfolio of equity securities for impairment at least quarterly.
Capital Resources Stockholders’ equity totaled $1.3 billion at December 31, 2022, compared to $1.2 billion at December 31, 2021.
Capital Resources Stockholders’ equity totaled $1.4 billion at December 31, 2023, compared to $1.3 billion at December 31, 2022.
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.
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.
Provision for and Benefit from Credit Losses As shown in the selected consolidated financial table above, the Company recorded a provision for credit losses for 2022, compared to a net benefit from reversal of provision for credit losses for 2021 and a provision for credit losses for 2020.
Provision For and Benefit From Credit Losses As shown in the selected consolidated financial table above, the Company recorded a provision for credit losses for 2023 and 2022, compared to a net benefit from reversal of provision for credit losses for 2021. The Company's provision for credit losses decreased in 2023 due to improving economic forecasts.
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 time deposits require the majority of cash obligations in the next twelve months.
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.
The acquired loans outstanding were $263.5 million and $312.0 million, at December 31, 2022 and 2021, respectively. Intangible Assets, Goodwill and Other Assets Identifiable intangible assets and goodwill totaled $202.0 million and $167.5 million at December 31, 2022 and December 31, 2021, 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.
This compares to an increase of $28.3 million, or 11.0%, for 2021. The increase in noninterest expense in 2022 was due to the increase in salaries and employee benefits of $18.3 million, noninterest expenses (including salaries and employee benefits) related to the Worthington acquisition, and an increase in deposit insurance.
The increase in noninterest expense in 2022 was due to the increase in salaries and employee benefits of $18.3 million, noninterest expenses (including salaries and employee benefits) related to the Worthington acquisition, and an increase in deposit insurance.
Noninterest income included NSF and overdraft fees totaling $26.0 million, $25.0 million and $26.6 million in 2022, 2021 and 2020, respectively. This represents 14.2%, 14.7%, and 19.4% of the Company’s noninterest income for the years 2022, 2021 and 2020, respectively.
Noninterest income included NSF and overdraft fees totaling $27.9 million, $26.0 million and $25.0 million in 2023, 2022 and 2021, respectively. This represents 15.1%, 14.2%, and 14.7% of the Company’s noninterest income for the years 2023, 2022 and 2021, respectively.
The amount of net loan charge-offs is relatively low, equating to 0.02% and 0.11% of average total loans for the years ended December 31, 2022 and 2021, respectively.
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.
The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. Historically, BancFirst has more liquidity than its peers do.
The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding.
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 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.
Loan fees included in interest income were $24.1 30 Table of Contents million for the year ended December 31, 2022 compared to $55.5 million for the year ended December 31, 2021 and $33.5 million for the year ended December 31, 2020.
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.
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 2022 and 2021.
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.
The rate was 0.25% during all of 2021. 36 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 requirements for liquidity, operating cash and reserves, available yields and interest rate sensitivity management.
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 income from sales of loans in 2021 was higher due to the increase in the volume of mortgage loans originated because of record low mortgage rates. The Company expects the volume of mortgage loans originated to continue to decrease during 2023 due to higher mortgage interest rates.
The income from sales of loans in 2023 was lower due to higher mortgage rates resulting in a decrease of originations. The income from sales of loans in 2021 was higher due to the increase in the volume of mortgage loans originated because of record low mortgage rates.
Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments generally have fixed expiration dates or other termination clauses.
Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments generally have fixed expiration dates or other termination clauses.
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. As described above, due to the interest rate increases during 2022, the Company recognized a loss on the sale of debt securities of $4.0 million.
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.
Average balance sheets, comprehensive income statements and other financial statistics are also presented on a taxable equivalent basis. 34 Table of Contents Impact of Inflation The impact of inflation on financial institutions differs significantly from that of industrial or commercial companies.
Certain financial information is prepared on a taxable equivalent basis to facilitate analysis of yields and changes in components of earnings. Average balance sheets, comprehensive income statements and other financial statistics are also presented on a taxable equivalent basis. Impact of Inflation The impact of inflation on financial institutions differs significantly from that of industrial or commercial companies.
Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio.
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.
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. 35 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, 2022 2021 Balance Sheet Data Total assets $ 12,387,863 $ 9,405,612 Debt securities 1,540,604 534,500 Total loans (net of unearned interest) 6,949,795 6,194,218 Allowance for credit losses 92,728 83,936 Deposits 10,974,228 8,091,914 Subordinated debt 86,044 85,987 Stockholders’ equity 1,250,836 1,171,734 Book value per share 38.05 35.94 Tangible book value per shares (non-GAAP)(1) 31.90 30.80 Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2) Stockholders’ equity $ 1,250,836 $ 1,171,734 Less goodwill 182,055 149,922 Less intangible assets, net 19,983 17,566 Tangible stockholders' equity (non-GAAP) $ 1,048,798 $ 1,004,246 Common shares outstanding 32,875,560 32,603,118 Tangible book value per share (non-GAAP) $ 31.90 $ 30.80 Selected Financial Ratios Performance Ratios: Return on average assets 1.56 % 1.54 % Return on average stockholders' equity 16.11 14.88 Cash dividends payout ratio 25.81 27.34 Net interest spread 2.93 3.05 Net interest margin 3.29 3.15 Efficiency ratio 55.60 58.88 Balance Sheet Ratios: Average loans to deposits 60.06 % 64.27 % Average earning assets to total assets 91.63 91.96 Average stockholders’ equity to average assets 9.67 10.32 Asset Quality Ratios: Nonaccrual loans to total loans 0.22 % 0.34 % Nonperforming and restructured loans to total loans 0.35 0.48 Nonperforming and restructured assets to total assets 0.50 0.73 Allowance for credit losses to total loans 1.33 1.36 Allowance for credit losses to nonperforming and restructured loans 376.67 284.33 Allowance for credit losses to nonaccrual loans 606.10 401.76 Net charge-offs to average loans 0.02 0.11 (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. 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.
Balances of these items can fluctuate widely based on these various factors. The aggregate of cash and due from banks and interest-bearing deposits with banks increased by $1.1 billion, or 54.7%, to $3.2 billion, from December 31, 2021 to December 31, 2022.
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.
These unrealized (losses)/gains are included in the Company’s stockholders’ equity as accumulated other comprehensive (loss)/income, net of income tax, in the amounts of a loss of $71.6 million and a gain of $2.2 million for December 31, 2022 and 2021, respectively.
These unrealized losses are included in the Company’s stockholders’ equity as accumulated other comprehensive loss, net of income tax, in the amounts of a loss of $50.0 million and a loss of $71.6 million for December 31, 2023 and 2022, respectively. The Company did not recognize a gain or loss on debt securities during the year ended December 31, 2023.
The Company recognized a net gain of $2.2 million during 2022, a net gain of $1.0 million during 2021, and a net loss of $389,000 during 2020, due to transactions of equity securities.
The Company also recognized a net loss of $1.8 million during 2023, a net gain of $2.2 million during 2022, and a net gain of $1.0 million during 2021, due to changes in the fair value of the equity securities.
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS Taxable Equivalent Basis (Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2020 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) $ 6,611,617 $ 336,739 5.09 % $ 6,220,192 $ 316,618 5.09 % $ 6,432,455 $ 312,514 4.85 % Debt securities – taxable 1,295,762 24,456 1.89 538,157 6,327 1.18 556,931 8,591 1.54 Debt securities – tax exempt 3,877 118 3.03 11,372 258 2.27 28,969 616 2.12 Federal funds sold and interest-bearing deposits with banks 3,450,093 58,931 1.71 3,268,443 4,366 0.13 1,562,383 6,049 0.39 Total earning assets 11,361,349 420,244 3.70 10,038,164 327,569 3.26 8,580,738 327,770 3.81 Nonearning assets: Cash and due from banks 260,028 271,004 220,995 Interest receivable and other assets 865,744 694,191 611,966 Allowance for credit losses (87,567 ) (88,028 ) (76,501 ) Total nonearning assets 1,038,205 877,167 756,460 Total assets $ 12,399,554 $ 10,915,331 $ 9,337,198 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Transaction deposits $ 957,719 $ 2,049 0.21 % $ 848,535 $ 634 0.07 % $ 744,632 $ 940 0.13 % Savings deposits 4,280,052 35,598 0.83 3,736,901 4,055 0.11 3,273,903 9,385 0.29 Time deposits 672,179 4,318 0.64 654,801 3,543 0.54 695,637 8,147 1.17 Short-term borrowings 4,333 60 1.39 2,608 2 0.08 2,745 8 0.30 Long-term borrowings — — — — — — 1,107 — — Subordinated debt 86,013 4,122 4.79 56,793 3,130 5.51 26,804 1,966 7.31 Total interest-bearing liabilities 6,000,296 46,147 0.77 5,299,638 11,364 0.21 4,744,828 20,446 0.43 Interest-free funds: Noninterest-bearing deposits 5,097,813 4,437,352 3,503,187 Interest payable and other liabilities 102,691 52,069 46,048 Stockholders’ equity 1,198,754 1,126,272 1,043,135 Total interest free funds 6,399,258 5,615,693 4,592,370 Total liabilities and stockholders’ equity $ 12,399,554 $ 10,915,331 $ 9,337,198 Net interest income $ 374,097 $ 316,205 $ 307,324 Net interest spread 2.93 % 3.05 % 3.38 % Effect of interest free funds 0.36 % 0.10 % 0.19 % Net interest margin 3.29 % 3.15 % 3.57 % 31 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, 2022 2021 2020 Income Statement Data Net interest income $ 373,673 $ 315,657 $ 306,668 Provision for (benefit from) credit losses 10,076 (8,690 ) 62,648 Noninterest income 183,747 170,032 137,222 Noninterest expense 309,912 285,981 257,730 Net income 193,100 167,630 99,586 Per Common Share Data Net income – basic $ 5.89 $ 5.12 $ 3.05 Net income – diluted 5.77 5.03 3.00 Cash dividends 1.52 1.40 1.32 Selected Financial Ratios Performance ratios: Return on average assets 1.56 % 1.54 % 1.06 % Return on average stockholders’ equity 16.11 14.88 9.52 Cash dividends payout ratio 25.81 27.34 43.28 Net interest spread 2.93 3.05 3.38 Net interest margin 3.29 3.15 3.57 Efficiency ratio 55.60 58.88 58.06 Net Interest Income Net interest income, which is the Company’s principal source of operating revenue, increased in 2022 by $58.0 million, to a total of $373.7 million, compared to an increase of $9.0 million in 2021.
CONSOLIDATED 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.
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 $ 8 7.24 % $ 5 5.46 % $ — — % $ — — % $ 13 6.56 % State and political subdivisions 1,185 1.22 685 3.22 — — — — 1,870 1.96 Other securities — — 500 0.10 — — — — 500 0.10 Total $ 1,193 1.27 $ 1,190 1.92 $ — — $ — — $ 2,383 1.59 Percentage of total 50.1 % 49.9 % — % — % 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 $ 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.
Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this will trigger a reduction of annual pretax income from debit card interchange fees of approximately $22 million beginning July 1, 2023. Noninterest Expense Total noninterest expense increased by $23.9 million, or 8.4% to $309.9 million for 2022.
Also, based on current run rates, annual pretax income from debit card interchange fees will be reduced by approximately $23 million from the impact of the Durbin Amendment. Noninterest Expense Total noninterest expense increased by $22.5 million, or 7.3% to $332.5 million for 2023. This compares to an increase of $23.9 million, or 8.4% to $309.9 million for 2022.
Provisions for credit losses have stabilized in 2022 after the economic downturn and recovery from the effects of the COVID pandemic in prior years. Also, the addition of acquired loans and loan growth led to an increase in the provision in 2022.
In 2021, provisions for credit losses normalized after the economic downturn and recovery from the effects of the COVID pandemic in prior years, and acquired loans and loan growth led to an increase in the provision in 2022. The Company’s reversal of provision for 2021 was based on improvements in economic conditions and the Company’s outlook for certain economic indicators.
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. Banking regulations limit bank dividends based upon net earnings retained by BancFirst and minimum capital requirements.
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.
Rising short-term interest rates and loan growth, along with net interest income related to the Worthington acquisition contributed to the increase in net interest income in 2022. The Company’s net interest margin increased to 3.29% for 2022, compared to 3.15% for 2021.
Rising short-term interest rates and loan growth contributed to the increase in 2023. Rising short-term interest rates and loan growth, along with net interest income related to the Worthington acquisition contributed to the increase in 2022. Net interest margin is shown in the preceding table.
The net charge-offs equated to 0.02%, 0.11% and 0.35% of average loans for 2022, 2021 and 2020, respectively. Net charge-offs were higher in 2020 primarily due to three loans. The rate of net charge-offs to average total loans continues to be at a low level.
Net loan charge-offs were $3.4 million for 2023 compared to $1.4 million for 2022 and $7.0 million for 2021. The net charge-offs equated to 0.05%, 0.02% and 0.11% of average loans for 2023, 2022 and 2021, respectively. The rate of net charge-offs to average total loans continues to be at a low level.
The Company’s core deposits as a percentage of total deposits was 98.1% at December 31, 2022 and 98.2% December 31, 2021. Noninterest-bearing deposits to total deposits were 45.1% at December 31, 2022, compared to 46.7% at December 31, 2021.
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.
In addition to net income of $193.1 million, other changes in stockholders’ equity during the year ended December 31, 2022 included $7.6 million related to common stock issuances and $1.9 million related to stock-based compensation, that were partially offset by $49.9 million in dividends, and a $73.7 million decrease in other comprehensive income.
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.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. At December 31, 2022, the allowance for credit losses to total loans represented 1.33% of total loans, compared to 1.36% at December 31, 2021.
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.
For the year ended December 31, 2020, the Company repurchased 59,284 shares of its common stock for $3.1 million at an average price of $52.26 per share under the SRP.
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.
Dividends in excess of these limits require regulatory approval. At January 1, 2023, BancFirst had approximately $185.1 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2022, BancFirst declared four common stock dividends totaling $54.4 million, two preferred stock dividends totaling $1.9 million and two special dividends totaling $30.8 million.
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.
SUMMARY The Company’s net income for 2022 was $193.1 million, or $5.77 per diluted share, compared to $167.6 million, or $5.03 per diluted share for 2021. In 2022, net interest income increased to $373.7 million, compared to $315.7 million in 2021.
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.
A more detailed discussion of the allowance for credit losses is provided under “Loans.” Noninterest Income Noninterest income is shown in the selected consolidated financial table above. Total noninterest income increased in 2022.
A more detailed discussion of the allowance for credit losses is provided under “Loans.” Noninterest Income Noninterest income is shown in the selected consolidated financial table above. Total noninterest income increased in 2023 due mostly to the increase in sweep account fees of $12.2 million resulting from higher yields and increased sweep account balances.
Debt securities available for sale represented 99.9% of the total debt securities portfolio at December 31, 2022, compared to 99.4% of total debt securities portfolio at December 31, 2021. Debt securities available for sale had a net unrealized loss of $93.7 million at December 31, 2022, compared to a net unrealized gain of $2.8 million at December 31, 2021.
Debt securities available for sale had a net unrealized loss of $65.5 million at December 31, 2023, compared to a net unrealized loss of $93.7 million at December 31, 2022.
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 $1.4 million for 2022 compared to $7.0 million for 2021 and $22.8 million for 2020.
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.
During 2022, the Federal Reserve began raising interest rates to help slow inflation in the economy. The Company’s net interest income and net interest margin were impacted by the increases in interest rates. Our expectation is that interest rates will continue to increase in the near term.
During 2022, the Federal Reserve began raising interest rates to help slow inflation in the economy. The Company’s net interest income and net interest margin were impacted by the increases in interest rates. Changes in the volume of earning assets and interest-bearing liabilities and changes in interest rates, determine the changes in net interest income.
The effective tax rates for both years were lower than the statutory tax rate due to the recognition of certain tax credits. The Company’s assets at year-end 2022 totaled $12.4 billion, an increase of $3.0 billion from December 31, 2021.
The effective tax rate for 2023 was higher than the statutory rate due to the adoption of ASU 2023-02 and state tax expense. The effective tax rate for 2022 was lower than the statutory tax rate due to the recognition of certain tax credits. The Company’s assets at year-end 2023 totaled $12.4 billion, virtually unchanged from December 31, 2022.
The increase in non-interest income was partially offset by a loss of $4.0 million on bonds resulting from the sale of $226 million of low yielding debt securities, which were subsequently reinvested in higher yielding debt securities.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeExpected Maturity / Principal Repayments at December 31, Rate 2023 2024 2025 2026 2027 Thereafter Balance Fair Value (Dollars in thousands) Interest Sensitive Assets Loans held for investment 5.09 % $ 3,181,592 $ 869,118 $ 772,007 $ 751,506 $ 608,719 $ 760,621 $ 6,943,563 $ 6,656,483 Debt securities 1.89 102,793 347,853 337,402 306,594 326,220 213,412 1,634,274 1,540,604 Federal funds sold and interest-bearing deposits 1.71 2,912,711 — — — — — 2,912,711 2,912,711 Interest Sensitive Liabilities Savings and transaction deposits 0.72 5,316,444 — — — — — 5,316,444 5,299,611 Time deposits 0.64 553,052 84,859 33,509 21,591 19,902 141 713,054 699,636 Short-term borrowings 1.39 300 — — — — — 300 300 Subordinated debt 4.79 — — — — — 86,044 86,044 82,385 Off Balance Sheet Items Loan commitments — — — — — — — 4,598 Letters of credit — — — — — — — 542 The expected maturities and principal repayments are based upon the contractual terms of the instruments.
Biggest changeExpected 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.
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, 2022. 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, 2023. Avg.
The actual maturities and principal repayments for the financial instruments could vary substantially from the contractual terms and assumptions used in the analysis. 47 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. 49 Table of Contents
Debt securities are stated at par value. Prepayments have been estimated for certain instruments with predictable prepayment rates. Savings and transaction deposits are assumed to mature all in the first year as they are not subject to withdrawal restrictions and any assumptions regarding decay rates would be very subjective.
Debt securities are stated at par value. Prepayments have been estimated for certain instruments with predictable prepayment rates. Savings and interest bearing demand deposits are assumed to mature all in the first year as they are not subject to withdrawal restrictions and any assumptions regarding decay rates would be very subjective.
This analysis indicates that the Company’s position is asset-sensitive, with a positive gap of $327 million for the zero to 12-month interval at December 31, 2022, which was 2.64% of total assets, compared to a positive gap of $423 million for the zero to 12-month interval at December 31, 2021, which was 5.45% of total assets.
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.
As of December 31, 2022, the model simulations projected that a 100 and 200 basis point increase would result in positive variance in net interest income of 0.53% and 1.07%, respectively, relative to the base case over the next 12 months.
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.
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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.

Other BANFP 10-K year-over-year comparisons