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EX-32.2 - EX-32.2 - BANCFIRST CORP /OK/banf-ex322_6.htm
EX-32.1 - EX-32.1 - BANCFIRST CORP /OK/banf-ex321_8.htm
EX-31.2 - EX-31.2 - BANCFIRST CORP /OK/banf-ex312_9.htm
EX-31.1 - EX-31.1 - BANCFIRST CORP /OK/banf-ex311_10.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to

Commission File Number 0-14384

 

BancFirst Corporation

(Exact name of registrant as specified in charter)

 

 

Oklahoma

 

73-1221379

(State or other Jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

101 N. Broadway, Oklahoma City, Oklahoma

 

73102-8405

(Address of principal executive offices)

 

(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

  (Do not check if a smaller reporting company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 31, 2016 there were 15,708,383 shares of the registrant’s Common Stock outstanding.

 

 

 

 


PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

 

2016

 

 

 

2015

 

 

 

(unaudited)

 

 

(see Note 1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

174,061

 

 

$

203,364

 

Interest-bearing deposits with banks

 

 

1,532,095

 

 

 

1,394,813

 

Federal funds sold

 

 

500

 

 

 

 

Securities (fair value: $473,785 and $553,010, respectively)

 

 

473,738

 

 

 

552,949

 

Loans held for sale

 

 

9,685

 

 

 

13,725

 

Loans (net of unearned interest)

 

 

4,307,827

 

 

 

4,232,048

 

Allowance for loan losses

 

 

(48,061

)

 

 

(41,666

)

Loans, net of allowance for loan losses

 

 

4,259,766

 

 

 

4,190,382

 

Premises and equipment, net

 

 

126,415

 

 

 

126,813

 

Other real estate owned

 

 

4,038

 

 

 

7,984

 

Intangible assets, net

 

 

13,898

 

 

 

15,695

 

Goodwill

 

 

54,042

 

 

 

54,042

 

Accrued interest receivable and other assets

 

 

135,299

 

 

 

133,062

 

Total assets

 

$

6,783,537

 

 

$

6,692,829

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,477,107

 

 

$

2,409,769

 

Interest-bearing

 

 

3,547,842

 

 

 

3,563,589

 

Total deposits

 

 

6,024,949

 

 

 

5,973,358

 

Short-term borrowings

 

 

4,000

 

 

 

500

 

Accrued interest payable and other liabilities

 

 

28,898

 

 

 

31,502

 

Junior subordinated debentures

 

 

31,959

 

 

 

31,959

 

Total liabilities

 

 

6,089,806

 

 

 

6,037,319

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued

 

 

 

 

 

 

Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued

 

 

 

 

 

 

Common stock, $1.00 par, 20,000,000 shares authorized; shares issued and

   outstanding: 15,695,083 and 15,597,446, respectively

 

 

15,695

 

 

 

15,597

 

Capital surplus

 

 

111,012

 

 

 

102,865

 

Retained earnings

 

 

565,039

 

 

 

535,521

 

Accumulated other comprehensive income, net of income tax of $1,252

and $962, respectively

 

 

1,985

 

 

 

1,527

 

Total stockholders' equity

 

 

693,731

 

 

 

655,510

 

Total liabilities and stockholders' equity

 

$

6,783,537

 

 

$

6,692,829

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

2


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

 

2016

 

 

 

2015

 

 

 

2016

 

 

 

2015

 

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

51,647

 

 

$

47,342

 

 

$

152,888

 

 

$

139,781

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,242

 

 

 

1,291

 

 

 

3,913

 

 

 

4,148

 

Tax-exempt

 

 

248

 

 

 

249

 

 

 

746

 

 

 

730

 

Federal funds sold

 

 

1

 

 

 

 

 

 

1

 

 

 

 

Interest-bearing deposits with banks

 

 

1,968

 

 

 

1,009

 

 

 

5,622

 

 

 

3,137

 

Total interest income

 

 

55,106

 

 

 

49,891

 

 

 

163,170

 

 

 

147,796

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,149

 

 

 

2,522

 

 

 

9,321

 

 

 

7,602

 

Short-term borrowings

 

 

2

 

 

 

1

 

 

 

5

 

 

 

3

 

Junior subordinated debentures

 

 

524

 

 

 

492

 

 

 

1,569

 

 

 

1,474

 

Total interest expense

 

 

3,675

 

 

 

3,015

 

 

 

10,895

 

 

 

9,079

 

Net interest income

 

 

51,431

 

 

 

46,876

 

 

 

152,275

 

 

 

138,717

 

Provision for loan losses

 

 

2,940

 

 

 

1,424

 

 

 

9,847

 

 

 

4,029

 

Net interest income after provision for loan losses

 

 

48,491

 

 

 

45,452

 

 

 

142,428

 

 

 

134,688

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust revenue

 

 

2,685

 

 

 

2,295

 

 

 

7,752

 

 

 

6,837

 

Service charges on deposits

 

 

16,033

 

 

 

14,910

 

 

 

46,228

 

 

 

42,574

 

Securities transactions (includes accumulated other comprehensive income reclassifications of $(85), $0, $15 and $3,912, respectively)

 

 

(146

)

 

 

 

 

 

(111

)

 

 

7,121

 

Income from sales of loans

 

 

863

 

 

 

545

 

 

 

2,120

 

 

 

1,534

 

Insurance commissions

 

 

4,372

 

 

 

4,427

 

 

 

11,762

 

 

 

11,615

 

Cash management

 

 

2,853

 

 

 

1,906

 

 

 

7,903

 

 

 

5,611

 

Gain on sale of other assets

 

 

2

 

 

 

27

 

 

 

61

 

 

 

108

 

Other

 

 

1,265

 

 

 

1,214

 

 

 

3,886

 

 

 

3,935

 

Total noninterest income

 

 

27,927

 

 

 

25,324

 

 

 

79,601

 

 

 

79,335

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

30,591

 

 

 

28,746

 

 

 

89,956

 

 

 

84,145

 

Occupancy, net

 

 

3,217

 

 

 

3,051

 

 

 

9,115

 

 

 

8,586

 

Depreciation

 

 

2,556

 

 

 

2,488

 

 

 

7,653

 

 

 

7,401

 

Amortization of intangible assets

 

 

560

 

 

 

444

 

 

 

1,721

 

 

 

1,333

 

Data processing services

 

 

1,178

 

 

 

1,132

 

 

 

3,567

 

 

 

3,428

 

Net expense (income) from other real estate owned

 

 

162

 

 

 

51

 

 

 

(944

)

 

 

181

 

Marketing and business promotion

 

 

1,779

 

 

 

1,640

 

 

 

5,258

 

 

 

4,720

 

Deposit insurance

 

 

641

 

 

 

820

 

 

 

2,335

 

 

 

2,482

 

Other

 

 

8,520

 

 

 

7,980

 

 

 

24,554

 

 

 

24,428

 

Total noninterest expense

 

 

49,204

 

 

 

46,352

 

 

 

143,215

 

 

 

136,704

 

Income before taxes

 

 

27,214

 

 

 

24,424

 

 

 

78,814

 

 

 

77,319

 

Income tax expense

 

 

9,232

 

 

 

8,794

 

 

 

26,760

 

 

 

26,877

 

Net income

 

$

17,982

 

 

$

15,630

 

 

$

52,054

 

 

$

50,442

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.15

 

 

$

1.01

 

 

$

3.34

 

 

$

3.25

 

Diluted

 

$

1.13

 

 

$

0.98

 

 

$

3.28

 

 

$

3.18

 

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on securities, net of tax of $423, $(91), $(296) and $(507), respectively

 

 

(670

)

 

 

145

 

 

 

467

 

 

 

803

 

Reclassification adjustment for losses (gains) included in net income, net of tax of $(33), $0, $6 and $1,513, respectively

 

 

52

 

 

 

 

 

 

(9

)

 

 

(2,399

)

Other comprehensive (losses) gains, net of tax of $390, $(91), $(290) and $1,006, respectively

 

 

(618

)

 

 

145

 

 

 

458

 

 

 

(1,596

)

Comprehensive income

 

$

17,364

 

 

$

15,775

 

 

$

52,512

 

 

$

48,846

 

The accompanying Notes are an integral part of these consolidated financial statements.

3


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

COMMON STOCK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued at beginning of period

 

$

15,560

 

 

$

15,562

 

 

$

15,597

 

 

$

15,504

 

Shares issued

 

 

135

 

 

 

29

 

 

 

198

 

 

 

87

 

Shares acquired and canceled

 

 

 

 

 

 

 

 

(100

)

 

 

 

Issued at end of period

 

$

15,695

 

 

$

15,591

 

 

$

15,695

 

 

$

15,591

 

CAPITAL SURPLUS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

105,676

 

 

$

99,202

 

 

$

102,865

 

 

$

96,841

 

Common stock issued

 

 

3,767

 

 

 

749

 

 

 

5,634

 

 

 

2,065

 

Tax effect of stock options

 

 

1,204

 

 

 

395

 

 

 

1,247

 

 

 

686

 

Stock-based compensation arrangements

 

 

365

 

 

 

489

 

 

 

1,266

 

 

 

1,243

 

Balance at end of period

 

$

111,012

 

 

$

100,835

 

 

$

111,012

 

 

$

100,835

 

RETAINED EARNINGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

552,991

 

 

$

517,028

 

 

$

535,521

 

 

$

492,776

 

Net income

 

 

17,982

 

 

 

15,630

 

 

 

52,054

 

 

 

50,442

 

Dividends on common stock ($0.38, $0.36, $1.10 and $1.04 per share, respectively)

 

 

(5,934

)

 

 

(5,620

)

 

 

(17,113

)

 

 

(16,180

)

Common stock acquired and canceled

 

 

 

 

 

 

 

 

(5,423

)

 

 

 

Balance at end of period

 

$

565,039

 

 

$

527,038

 

 

$

565,039

 

 

$

527,038

 

ACCUMULATED OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

2,603

 

 

$

2,452

 

 

$

1,527

 

 

$

4,193

 

Net change

 

 

(618

)

 

 

145

 

 

 

458

 

 

 

(1,596

)

Balance at end of period

 

$

1,985

 

 

$

2,597

 

 

$

1,985

 

 

$

2,597

 

Total stockholders’ equity

 

$

693,731

 

 

$

646,061

 

 

$

693,731

 

 

$

646,061

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

4


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

52,054

 

 

$

50,442

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

9,847

 

 

 

4,029

 

Depreciation and amortization

 

 

9,374

 

 

 

8,734

 

Net amortization of securities premiums and discounts

 

 

161

 

 

 

747

 

Realized securities losses (gains)

 

 

111

 

 

 

(7,121

)

Gain on sales of loans

 

 

(2,120

)

 

 

(1,534

)

Cash receipts from the sale of loans originated for sale

 

 

143,044

 

 

 

132,957

 

Cash disbursements for loans originated for sale

 

 

(136,903

)

 

 

(134,396

)

Deferred income tax benefit

 

 

(3,069

)

 

 

(1,029

)

Gain on other assets

 

 

(1,294

)

 

 

(76

)

Increase in interest receivable

 

 

73

 

 

 

8

 

Decrease in interest payable

 

 

(22

)

 

 

(64

)

Amortization of stock-based compensation arrangements

 

 

1,266

 

 

 

1,243

 

Other, net

 

 

(1,684

)

 

 

4,797

 

Net cash provided by operating activities

 

$

70,838

 

 

$

58,737

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Net increase in federal funds sold

 

 

(500

)

 

 

Purchases of held for investment securities

 

 

(806

)

 

 

(1,085

)

Purchases of available for sale securities

 

 

(78,592

)

 

 

(41,424

)

Proceeds from maturities, calls and paydowns of held for investment securities

 

 

5,039

 

 

 

1,344

 

Proceeds from maturities, calls and paydowns of available for sale securities

 

 

153,620

 

 

 

53,285

 

Proceeds from sales of available for sale securities

 

 

426

 

 

 

8,576

 

Net change in loans

 

 

(82,782

)

 

 

(113,740

)

Purchases of premises, equipment and computer software

 

 

(7,845

)

 

 

(9,535

)

Proceeds from the sale of other assets

 

 

8,740

 

 

 

4,324

 

Net cash used in investing activities

 

 

(2,700

)

 

 

(98,255

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

51,591

 

 

 

(206,113

)

Net increase/(decrease) in short-term borrowings

 

 

3,500

 

 

 

(205

)

Issuance of common stock, net

 

 

7,079

 

 

 

2,838

 

Common stock acquired

 

 

(5,523

)

 

 

Cash dividends paid

 

 

(16,806

)

 

 

(15,836

)

Net cash provided by (used in) financing activities

 

 

39,841

 

 

 

(219,316

)

Net increase/(decrease) in cash, due from banks and interest-bearing deposits

 

 

107,979

 

 

 

(258,834

)

Cash, due from banks and interest-bearing deposits at the beginning of the period

 

 

1,598,177

 

 

 

1,913,895

 

Cash, due from banks and interest-bearing deposits at the end of the period

 

$

1,706,156

 

 

$

1,655,061

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

10,919

 

 

$

9,142

 

Cash paid during the period for income taxes

 

$

26,200

 

 

$

26,531

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Unpaid common stock dividends declared

 

$

5,922

 

 

$

5,609

 

 

The accompanying Notes are an integral part of these consolidated financial statements.

 

5


BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

(1)

DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United State of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc. and BancFirst and its subsidiaries. The principal operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate, Inc. and BancFirst Agency, Inc.  All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.

The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

The unaudited interim consolidated financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2015, the date of the most recent annual report.

Reclassifications

Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for loan losses, income taxes, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

Recent Accounting Pronouncements

In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 will be effective on January 1, 2018. Early adoption is permitted with retrospective applications. The Company is currently evaluating the potential impact of ASU 2016-15 on its financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 requires enhanced disclosures related to the significant estimates and judgements used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be effective on January 1, 2020. The Company is currently evaluating the potential impact of ASU 2016-13 on its financial statements.

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In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” Under ASU 2016-09 all excess tax benefits and tax deficiencies related to share-based payment awards should be recognized as income tax expense or benefit in the income statement during the period in which they occur. Previously, such amounts were recorded in the pool of excess tax benefits included in additional paid-in capital, if such pool was available. Because excess tax benefits are no longer recognized in additional paid-in capital, the assumed proceeds from applying the treasury stock method when computing earnings per share should exclude the amount of excess tax benefits that would have previously been recognized in additional paid-in capital. Additionally, excess tax benefits should be classified along with other income tax cash flows as an operating activity rather than a financing activity, as was previously the case. ASU 2016-09 also provides that an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 changes the threshold to qualify for equity classification (rather than as a liability) to permit withholding up to the maximum statutory tax rates (rather than the minimum as was previously the case) in the applicable jurisdictions. ASU 2016-09 will be effective on January 1, 2017 and is not expected to have a significant impact on the Company’s financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases - (Topic 842).” ASU 2016-02 requires that lessees recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. Adoption of ASU 2016-02 is not expected to have a significant impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10).” ASU 2016-01 require all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in the fair value recognized through net income. In addition, the amendment will require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Early adoption is not permitted. Adoption of ASU 2016-01 is not expected to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40).”  ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about the Company’s ability to continue as a going concern and related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date the financial statements are issued.  The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted. Adoption of ASU 2014-15 is not expected to have a significant impact on the Company’s financial statements.

 

 

(2)

RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

 

On October 8, 2015, the Company completed its acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce, with locations in Yukon, Mustang and El Reno, Oklahoma. Bank of Commerce had approximately $196 million in total assets, $147 million in loans, $175 million in deposits and $22 million in equity capital. The acquisition was accounted for under the acquisition method and the Company acquired 100% of the voting interest. Bank of Commerce operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on November 13, 2015. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $7.1 million and goodwill of approximately $9.4 million. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. The acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of CSB Bancshares Inc. and its subsidiary bank, Bank of Commerce complemented the Company’s community banking strategy by adding two communities to its banking network throughout Oklahoma.

 

During the quarter ended March 31, 2016, the Company had gains on the sale of other real estate owned totaling $1.2 million that is included in net expense (income) from other real estate owned in the consolidated statements of comprehensive income.

 

 

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(3)

SECURITIES

The following table summarizes securities held for investment and securities available for sale:

 

 

 

September 30, 2016

 

 

December 31, 2015

 

 

 

(Dollars in thousands)

 

Held for investment, at cost (fair value: $4,601 and $8,850, respectively)

 

$

4,554

 

 

$

8,789

 

Available for sale, at fair value

 

 

469,184

 

 

 

544,160

 

Total

 

$

473,738

 

 

$

552,949

 

 

The following table summarizes the amortized cost and estimated fair values of securities held for investment:

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair

Value

 

September 30, 2016

 

(Dollars in thousands)

 

Mortgage backed securities (1)

 

$

273

 

 

$

21

 

 

$

 

 

$

294

 

States and political subdivisions

 

 

3,781

 

 

 

28

 

 

 

(2

)

 

 

3,807

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

4,554

 

 

$

49

 

 

$

(2

)

 

$

4,601

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage backed securities (1)

 

$

347

 

 

$

25

 

 

$

 

 

$

372

 

States and political subdivisions

 

 

7,942

 

 

 

36

 

 

 

 

 

 

7,978

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

8,789

 

 

$

61

 

 

$

 

 

$

8,850

 

The following table summarizes the amortized cost and estimated fair values of securities available for sale:

 

 

 

 

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair

Value

 

September 30, 2016

 

(Dollars in thousands)

 

U.S. treasuries

 

$

204,350

 

 

$

1,773

 

 

$

 

 

$

206,123

 

U.S. federal agencies

 

 

192,271

 

 

 

494

 

 

 

(117

)

 

 

192,648

 

Mortgage backed securities (1)

 

 

20,467

 

 

 

379

 

 

 

(561

)

 

 

20,285

 

States and political subdivisions

 

 

42,412

 

 

 

1,354

 

 

 

(62

)

 

 

43,704

 

Other securities (2)

 

 

6,447

 

 

 

125

 

 

 

(148

)

 

 

6,424

 

Total

 

$

465,947

 

 

$

4,125

 

 

$

(888

)

 

$

469,184

 

December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

328,965

 

 

$

776

 

 

$

(45

)

 

$

329,696

 

U.S. federal agencies

 

 

131,522

 

 

 

527

 

 

 

(153

)

 

 

131,896

 

Mortgage backed securities (1)

 

 

21,973

 

 

 

425

 

 

 

(543

)