BANCFIRST CORPORATION REPORTS FOURTH QUARTER EARNINGS

Rhea-AI Summary

BancFirst Corporation (BANF) reported a decrease in net income for the fourth quarter of 2023 compared to the same period in 2022. The net interest income and noninterest income also decreased, while noninterest expenses increased. The company's total assets remained virtually unchanged, and its liquidity and asset quality remained strong. CEO David Harlow commented on the record earnings in 2023 and the company's outlook for 2024.

Insights

Financial Analyst

The reported decrease in BancFirst Corporation's net income for Q4 2023, compared to the same period in the previous year, indicates a potential concern for profitability that stakeholders should consider. The decline in net interest income and the net interest margin suggests that the bank's core business of lending is under pressure, likely due to rising interest rates that have increased the cost of interest-bearing deposits. It is important to note that despite these challenges, the bank managed to report an increase in annual net income, indicating resilience and possibly effective cost management strategies.

Another point of interest is the absence of a provision for credit losses in Q4 2023, which contrasts with the previous year's figures. This could reflect an improved credit environment or an aggressive stance on risk management. However, the increase in nonaccrual loans year over year could be a red flag, signaling potential future losses if these loans fail to perform. The bank's asset quality metrics, such as the allowance for credit losses to total loans, remain within a healthy range, although they have slightly decreased from the previous year.

The impact of the Durbin Amendment, which has reduced interchange fees, is a noteworthy aspect as it has directly affected noninterest income. This legislative change, coupled with the anticipated margin pressure and increased regulatory costs due to the bank crossing the $10 billion asset threshold, suggests that BancFirst may face headwinds in maintaining its income levels going forward.

Market Research Analyst

From a market perspective, BancFirst's performance and strategic position should be evaluated within the context of the broader banking industry and economic trends. The bank's loan growth, as indicated by the $710.3 million increase in total loans, is a positive sign of expanding business activities. However, the shift in deposit mix and the potential for ongoing margin pressure due to competition for deposits may affect future profitability.

Furthermore, the modest uptick in stockholders' equity and the strong liquidity position, with a significant cash reserve and a healthy loan to deposit ratio, suggest that BancFirst is maintaining a solid balance sheet. This could provide the bank with a buffer against potential economic downturns and enable it to capitalize on growth opportunities in a less pessimistic economic outlook, as mentioned by CEO David Harlow.

Investors should also consider the regional focus of BancFirst, with its operations primarily in Oklahoma and parts of Texas. Regional economic conditions, such as employment rates, business growth and real estate markets, will significantly influence the bank's performance. Additionally, the bank's community-based funding model, which avoids brokered or reciprocal deposits, may contribute to customer loyalty and stable funding but could limit aggressive growth strategies.

Regulatory Compliance Expert

The adoption of ASU 2023-02 by BancFirst Corporation has increased income tax expense, reflecting changes in accounting standards that stakeholders should be aware of. This update may have broader implications for the bank's financial reporting and tax strategies moving forward. Moreover, the bank's crossing of the $10 billion asset threshold has regulatory implications, including increased compliance costs. This regulatory milestone often triggers additional oversight from the Consumer Financial Protection Bureau (CFPB) and other regulatory bodies, which can lead to higher operational expenses and the need for more robust risk management frameworks.

It is also worth mentioning that the bank's effective tax rate has seen a slight increase from the previous year. While the rate remains competitive, any future changes in tax legislation could have a significant impact on the bank's net income and financial position. Stakeholders should monitor legislative developments that could affect the banking sector's tax obligations.

OKLAHOMA CITY, Jan. 18, 2024 /PRNewswire/ -- BancFirst Corporation (NASDAQ GS:BANF) reported net income of $48.9 million, or $1.46 diluted earnings per share, for the fourth quarter of 2023 compared to net income of $57.1 million, or $1.70 diluted earnings per share, for the fourth quarter of 2022. Net income for the year ended December 31, 2023 was $212.5 million, or $6.34 diluted earnings per share, compared to $193.1 million, or $5.77 diluted earnings per share, for the year ended December 31, 2022.

The Company's net interest income for the fourth quarter of 2023 decreased to $105.1 million compared to $110.4 million for the quarter ended December 31, 2022. This decrease resulted from an increase in both the volume and rate of interest bearing deposits. The net interest margin for the quarter was 3.67% compared to 3.83% a year ago. For the fourth quarter of 2023, the Company did not record recognize a provision for credit losses. In the fourth quarter of 2022, the Company recorded a provision for credit loss of $3.8 million due largely to loan growth.

Noninterest income for the quarter totaled $45.2 million, compared to $48.2 million last year. The decrease in noninterest income was primarily due to a reduction of interchange fees of approximately $5.3 million related to the impact of the Durbin amendment. Trust revenue, sweep fees and insurance commissions were all up modestly.

Noninterest expense for the quarter increased to $89.8 million compared to $84.6 million last year. The increase was primarily related to growth in salaries and employee benefits of $2.7 million. In addition, the quarter included a write down on other real estate owned of $5.2 million compared to $3.7 million during the fourth quarter of 2022.

The Company's effective tax rate for the period was 18.99% compared to 18.55% for the fourth quarter of 2022. During the first quarter of 2023, the Company adopted ASU 2023-02 which increased income tax expense.

At December 31, 2023, the Company's total assets were $12.4 billion, virtually unchanged from December 31, 2022. Loans totaled $7.7 billion, an increase of $710.3 million from December 31, 2022. Liquidity remained strong with cash of $2.4 billion and an average loan to deposit ratio of 70.5% for the quarter ended December 31, 2023. Deposits totaled $10.7 billion, compared to $11.0 billion at December 31, 2022. Sweep accounts totaled $4.3 billion at December 31, 2023 up $612.8 million from the prior year. The Company continues to fund itself with community based deposits and does not use brokered or reciprocal deposits. The Company's total stockholders' equity was $1.4 billion, an increase of $183.1 million from December 31, 2022.

Asset quality remained strong with nonaccrual loans of $24.6 million, representing 0.32% of total loans at December 31, 2023. Nonaccrual loans were $15.3 million or 0.22% of total loans at December 31, 2022. The allowance for credit losses to total loans stood at 1.26% at December 31, 2023 compared to 1.33% at December 31, 2022. Net charge-offs were $3.4 million for the year or 0.05% of average loans, compared to $1.4 million or 0.02% of average loans for the year ended December 31, 2022.

BancFirst Corporation CEO David Harlow commented, "The Company reported record earnings in 2023 at $6.34 diluted earnings per share as we successfully managed through the Federal Reserve's continued tightening with the Fed Funds rate reaching its highest level in 22 years in July. The ensuing shift in deposit mix out of non-interest bearing accounts into interest bearing accounts put pressure on the net interest margin as the year progressed which we were able to mitigate somewhat with strong loan growth throughout the year. Absent the impact of the Durbin Amendment on interchange, all major non-interest income categories showed good growth during the year. The Company's earnings will be less in 2024 with a full year of Durbin, ongoing margin pressure anticipated as a result of continued competition for deposits, and increased regulatory compliance costs as a result of crossing the $10 billion asset threshold. Our current outlook on the economy is less pessimistic than a year ago as reflected in our modestly lower CECL reserve percentage at December 31, 2023, when compared to a year ago."

BancFirst Corporation (the Company) is an Oklahoma based financial services holding company. The Company operates three subsidiary banks, BancFirst, an Oklahoma state-chartered bank with 106 banking locations serving 59 communities across Oklahoma, Pegasus Bank, with 3 banking locations in the Dallas Metroplex area and Worthington Bank with 3 locations in the Fort Worth Metroplex area, 1 location in Arlington Texas and 1 location in Denton Texas. More information can be found at www.bancfirst.bank.

The Company may make forward-looking statements within the meaning of Section 27A of the securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management's current expectations or forecasts of future events.  The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions, the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time.  Actual results may differ materially from forward-looking statements.

 

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		2023		2023		2023		2023		2022
		4th Qtr		3rd Qtr		2nd Qtr		1st Qtr		4th Qtr
Condensed Income Statements:
Net interest income		$    105,066		$    104,308		$    105,926		$    109,156		$    110,352
Provision for credit losses		-		2,312		2,824		2,322		3,776
Noninterest income:
Trust revenue		5,106		4,866		4,590		4,222		4,065
Service charges on deposits		16,841		17,027		22,268		21,231		21,603
Securities transactions		(1,364)		(361)		110		(213)		1,116
Income from sales of loans		512		734		757		604		657
Insurance commissions		7,220		8,429		6,225		8,741		6,656
Cash management		7,878		8,177		7,927		6,734		6,124
Other		8,964		5,577		6,097		6,509		7,947
Total noninterest income		45,157		44,449		47,974		47,828		48,168
Noninterest expense:
Salaries and employee benefits		50,731		50,200		49,803		49,252		48,019
Occupancy expense, net		5,439		5,487		5,118		4,983		5,259
Depreciation		4,560		4,685		4,769		4,643		4,566
Amortization of intangible assets		887		885		880		880		880
Data processing services		2,224		1,820		2,217		2,107		1,928
Net expense from other real estate owned		7,870		2,720		2,889		2,459		6,235
Marketing and business promotion		2,653		2,034		1,900		2,527		2,465
Deposit insurance		1,332		1,419		1,463		1,613		1,209
Other		14,120		11,965		12,071		11,853		14,044
Total noninterest expense		89,816		81,215		81,110		80,317		84,605
Income before income taxes		60,407		65,230		69,966		74,345		70,139
Income tax expense		11,473		14,242		14,956		16,812		13,013
Net income		$      48,934		$      50,988		$      55,010		$      57,533		$      57,126
Per Common Share Data:
Net income-basic		$          1.48		$          1.55		$          1.67		$          1.75		$          1.74
Net income-diluted		1.46		1.52		1.64		1.72		1.70
Cash dividends declared		0.43		0.43		0.40		0.40		0.40
Common shares outstanding		32,933,018		32,921,393		32,939,256		32,899,493		32,875,560
Average common shares outstanding -
Basic		32,926,326		32,937,149		32,920,497		32,892,857		32,868,087
Diluted		33,483,691		33,539,389		33,467,254		33,462,379		33,503,937
Performance Ratios:
Return on average assets		1.58 %		1.68 %		1.85 %		1.90 %		1.82 %
Return on average stockholders' equity		13.98		14.93		16.59		18.31		18.62
Net interest margin		3.67		3.73		3.87		3.89		3.83
Efficiency ratio		59.79		54.60		52.70		51.16		53.37

 

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		Twelve months ended
		December 31,
		2023		2022
Condensed Income Statements:
Net interest income		$    424,456		$    373,673
Provision for credit losses		7,458		10,076
Noninterest income:
Trust revenue		18,784		15,645
Service charges on deposits		77,367		86,757
Securities transactions		(1,828)		(1,833)
Income from sales of loans		2,607		4,548
Insurance commissions		30,615		26,883
Cash management		30,716		19,326
Other		27,147		32,421
Total noninterest income		185,408		183,747
Noninterest expense:
Salaries and employee benefits		199,986		184,976
Occupancy expense, net		21,027		19,326
Depreciation		18,657		18,600
Amortization of intangible assets		3,532		3,448
Data processing services		8,368		7,584
Net expense from other real estate owned		15,938		9,911
Marketing and business promotion		9,114		8,074
Deposit insurance		5,827		4,735
Other		50,009		53,258
Total noninterest expense		332,458		309,912
Income before income taxes		269,948		237,432
Income tax expense		57,483		44,332
Net income		$    212,465		$    193,100
Per Common Share Data:
Net income-basic		$          6.45		$          5.89
Net income-diluted		6.34		5.77
Cash dividends declared		1.66		1.52
Common shares outstanding		32,933,018		32,875,560
Average common shares outstanding -
Basic		32,919,348		32,778,355
Diluted		33,494,487		33,439,496
Performance Ratios:
Return on average assets		1.75 %		1.56 %
Return on average stockholders' equity		15.89		16.11
Net interest margin		3.79		3.29
Efficiency ratio		54.51		55.60

 

BancFirst Corporation
Summary Financial Information
(Dollars in thousands, except per share and share data - Unaudited)
		2023		2023		2023		2023		2022
		4th Qtr		3rd Qtr		2nd Qtr		1st Qtr		4th Qtr
Balance Sheet Data:
Total assets		$ 12,372,042		$ 12,114,602		$ 12,020,265		$ 12,332,105		$ 12,387,863
Interest-bearing deposits with banks		2,172,001		2,134,081		2,188,004		2,623,565		2,909,861
Debt securities		1,555,095		1,525,448		1,570,620		1,618,233		1,540,604
Total loans		7,660,134		7,476,474		7,307,475		7,124,831		6,949,795
Allowance for credit losses		(96,800)		(97,776)		(96,920)		(94,760)		(92,728)
Deposits		10,700,122		10,534,171		10,475,180		10,610,103		10,974,228
Stockholders' equity		1,433,891		1,370,584		1,340,791		1,310,882		1,250,836
Book value per common share		43.54		41.63		40.70		39.85		38.05
Tangible book value per common share (non-GAAP)(1)		37.50		35.56		34.62		33.73		31.90
Balance Sheet Ratios:
Average loans to deposits		70.52 %		70.61 %		69.85 %		64.54 %		62.25 %
Average earning assets to total assets		92.42		92.39		92.23		92.52		92.14
Average stockholders' equity to average assets		11.30		11.28		11.17		10.36		9.80
Asset Quality Data:
Past due loans		$          9,542		$        12,575		$          8,799		$          7,258		$          7,085
Nonaccrual loans (3)		24,573		16,676		18,047		17,649		15,299
Other real estate owned and repossessed assets		34,200		42,782		41,612		38,874		36,936
Nonaccrual loans to total loans		0.32 %		0.22 %		0.25 %		0.25 %		0.22 %
Allowance to total loans		1.26		1.31		1.33		1.33		1.33
Allowance to nonaccrual loans		393.92		586.34		537.05		536.93		606.10
Net charge-offs to average loans		0.02		0.02		0.01		0.00		0.01
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)(2):
Stockholders' equity		$   1,433,891		$   1,370,584		$   1,340,791		$   1,310,882		$   1,250,836
Less goodwill		182,263		182,263		182,055		182,055		182,055
Less intangible assets, net		16,704		17,591		18,223		19,103		19,983
Tangible stockholders' equity (non-GAAP)		$   1,234,924		$   1,170,730		$   1,140,513		$   1,109,724		$   1,048,798
Common shares outstanding		32,933,018		32,921,393		32,939,256		32,899,493		32,875,560
Tangible book value per common share (non-GAAP)		$          37.50		$          35.56		$          34.62		$          33.73		$          31.90

(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. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of the Company. This measure should not be considered a substitute for operating results determined in accordance with GAAP.

(3) Government Agencies guarantee approximately $6.7 million of nonaccrual loans at December 31, 2023.

 

BancFirst Corporation
Consolidated Average Balance Sheets
And Interest Margin Analysis
Taxable Equivalent Basis
(Dollars in thousands - Unaudited)
		Three Months Ended						Twelve Months Ended
		December 31, 2023						December 31, 2023
				Interest		Average				Interest		Average
		Average		Income/		Yield/		Average		Income/		Yield/
		Balance		Expense		Rate		Balance		Expense		Rate
ASSETS
Earning assets:
Loans		$  7,532,162		$126,757		6.68	%	$  7,292,871		$467,951		6.42	%
Debt securities – taxable		1,534,062		9,179		2.37		1,565,697		36,838		2.35
Debt securities – tax exempt		3,635		26		2.84		3,339		91		2.71
Interest bearing deposits with banks and FFS		2,286,826		31,607		5.48		2,343,182		119,486		5.10
Total earning assets		11,356,685		167,569		5.85		11,205,089		624,366		5.57
Nonearning assets:
Cash and due from banks		201,800						204,394
Interest receivable and other assets		827,456						814,419
Allowance for credit losses		(97,757)						(96,154)
Total nonearning assets		931,499						922,659
Total assets		$12,288,184						$12,127,748
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Transaction deposits		$     821,237		$    2,288		1.11	%	$     849,707		$    7,559		0.89	%
Savings deposits		4,862,828		49,841		4.07		4,598,936		164,291		3.57
Time deposits		916,518		9,170		3.97		797,179		23,196		2.91
Short-term borrowings		3,786		51		5.30		6,432		312		4.84
Subordinated debt		86,091		1,031		4.75		86,070		4,122		4.79
Total interest bearing liabilities		6,690,460		62,381		3.70		6,338,324		199,480		3.15
Interest free funds:
Noninterest bearing deposits		4,080,430						4,343,646
Interest payable and other liabilities		128,809						108,438
Stockholders' equity		1,388,485						1,337,340
Total interest free  funds		5,597,724						5,789,424
Total liabilities and stockholders' equity		$12,288,184						$12,127,748
Net interest income				$105,188						$424,886
Net interest spread						2.15	%					2.42	%
Effect of interest free funds						1.52	%					1.37	%
Net interest margin						3.67	%					3.79	%

 

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SOURCE BancFirst

FAQ

What is the net income reported by BancFirst Corporation for the fourth quarter of 2023?

BancFirst Corporation reported a net income of $48.9 million for the fourth quarter of 2023.

What is the ticker symbol for BancFirst Corporation?

The ticker symbol for BancFirst Corporation is BANF.

What is the total assets of BancFirst Corporation at December 31, 2023?

The total assets of BancFirst Corporation were $12.4 billion at December 31, 2023, virtually unchanged from December 31, 2022.

What is the CEO's outlook for BancFirst Corporation in 2024?

CEO David Harlow mentioned that the company's earnings will be less in 2024 due to the impact of the Durbin Amendment on interchange, ongoing margin pressure, and increased regulatory compliance costs as a result of crossing the $10 billion asset threshold.