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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_10.htm
EX-31.1 - EX-31.1 - BANCFIRST CORP /OK/banf-ex311_7.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 March 31, 2017

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

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.        

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 April 28, 2017 there were 15,906,276 shares of the registrant’s Common Stock outstanding.

 

 

 

 


PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

 

2017

 

 

 

2016

 

 

 

(unaudited)

 

 

(see Note 1)

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

180,051

 

 

$

183,921

 

Interest-bearing deposits with banks

 

 

1,857,961

 

 

 

1,666,540

 

Federal funds sold

 

 

200

 

 

 

700

 

Securities (fair value: $463,285 and $469,871, respectively)

 

 

463,250

 

 

 

469,833

 

Loans held for sale

 

 

7,754

 

 

 

9,318

 

Loans (net of unearned interest)

 

 

4,390,775

 

 

 

4,400,232

 

Allowance for loan losses

 

 

(47,921

)

 

 

(48,693

)

Loans, net of allowance for loan losses

 

 

4,342,854

 

 

 

4,351,539

 

Premises and equipment, net

 

 

127,124

 

 

 

126,771

 

Other real estate owned

 

 

4,018

 

 

 

3,526

 

Intangible assets, net

 

 

12,768

 

 

 

13,330

 

Goodwill

 

 

54,042

 

 

 

54,042

 

Accrued interest receivable and other assets

 

 

139,615

 

 

 

139,432

 

Total assets

 

$

7,189,637

 

 

$

7,018,952

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

2,652,691

 

 

$

2,526,842

 

Interest-bearing

 

 

3,741,936

 

 

 

3,721,215

 

Total deposits

 

 

6,394,627

 

 

 

6,248,057

 

Short-term borrowings

 

 

800

 

 

 

500

 

Accrued interest payable and other liabilities

 

 

32,378

 

 

 

27,342

 

Junior subordinated debentures

 

 

31,959

 

 

 

31,959

 

Total liabilities

 

 

6,459,764

 

 

 

6,307,858

 

 

 

 

 

 

 

 

 

 

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: 15,891,276 and 15,810,935, respectively

 

 

15,891

 

 

 

15,811

 

Capital surplus

 

 

120,435

 

 

 

117,541

 

Retained earnings

 

 

593,631

 

 

 

577,648

 

Accumulated other comprehensive (loss) income, net of income tax of $54

and $(59), respectively

 

 

(84

)

 

 

94

 

Total stockholders' equity

 

 

729,873

 

 

 

711,094

 

Total liabilities and stockholders' equity

 

$

7,189,637

 

 

$

7,018,952

 

 

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

 

 

 

March 31,

 

 

 

 

2017

 

 

 

2016

 

INTEREST INCOME

 

 

 

 

 

 

 

 

Loans, including fees

 

$

53,635

 

 

$

50,195

 

Securities:

 

 

 

 

 

 

 

 

Taxable

 

 

1,761

 

 

 

1,327

 

Tax-exempt

 

 

187

 

 

 

255

 

Interest-bearing deposits with banks

 

 

3,440

 

 

 

1,802

 

Total interest income

 

 

59,023

 

 

 

53,579

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

Deposits

 

 

3,725

 

 

 

3,080

 

Short-term borrowings

 

 

3

 

 

 

1

 

Junior subordinated debentures

 

 

527

 

 

 

522

 

Total interest expense

 

 

4,255

 

 

 

3,603

 

Net interest income

 

 

54,768

 

 

 

49,976

 

Provision for loan losses

 

 

72

 

 

 

4,103

 

Net interest income after provision for loan losses

 

 

54,696

 

 

 

45,873

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

Trust revenue

 

 

2,952

 

 

 

2,465

 

Service charges on deposits

 

 

15,778

 

 

 

14,710

 

Securities transactions (includes accumulated other comprehensive income reclassifications of $0 and $100, respectively)

 

 

 

 

 

100

 

Income from sales of loans

 

 

632

 

 

 

562

 

Insurance commissions

 

 

4,563

 

 

 

4,135

 

Cash management

 

 

2,754

 

 

 

2,318

 

(Loss) gain on sale of other assets

 

 

(24

)

 

 

4

 

Other

 

 

1,430

 

 

 

1,323

 

Total noninterest income

 

 

28,085

 

 

 

25,617

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

30,654

 

 

 

29,357

 

Occupancy, net

 

 

2,974

 

 

 

2,827

 

Depreciation

 

 

2,420

 

 

 

2,530

 

Amortization of intangible assets

 

 

547

 

 

 

581

 

Data processing services

 

 

1,195

 

 

 

1,215

 

Net expense (income) from other real estate owned

 

 

50

 

 

 

(1,141

)

Marketing and business promotion

 

 

2,215

 

 

 

1,855

 

Deposit insurance

 

 

588

 

 

 

839

 

Other

 

 

8,945

 

 

 

8,228

 

Total noninterest expense

 

 

49,588

 

 

 

46,291

 

Income before taxes

 

 

33,193

 

 

 

25,199

 

Income tax expense

 

 

11,143

 

 

 

8,620

 

Net income

 

$

22,050

 

 

$

16,579

 

NET INCOME PER COMMON SHARE

 

 

 

 

 

 

 

 

Basic

 

$

1.39

 

 

$

1.07

 

Diluted

 

$

1.36

 

 

$

1.05

 

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

Unrealized (losses)/gains on securities, net of tax of $113 and $(374), respectively

 

 

(178

)

 

 

591

 

Reclassification adjustment for gains included in net income, net of tax of $0 and $39, respectively

 

 

 

 

 

(61

)

Other comprehensive (losses)/gains, net of tax of $113 and $(335), respectively

 

 

(178

)

 

 

530

 

Comprehensive income

 

$

21,872

 

 

$

17,109

 

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

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

COMMON STOCK

 

 

 

 

 

 

 

 

Issued at beginning of period

 

$

15,811

 

 

$

15,597

 

Shares issued

 

 

80

 

 

 

31

 

Shares acquired and canceled

 

 

 

 

 

(100

)

Issued at end of period

 

$

15,891

 

 

$

15,528

 

CAPITAL SURPLUS

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

117,541

 

 

$

102,865

 

Common stock issued

 

 

2,672

 

 

 

871

 

Tax effect of stock options

 

 

 

 

 

(209

)

Stock-based compensation arrangements

 

 

222

 

 

 

451

 

Balance at end of period

 

$

120,435

 

 

$

103,978

 

RETAINED EARNINGS

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

577,648

 

 

$

535,521

 

Net income

 

 

22,050

 

 

 

16,579

 

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

 

 

(6,067

)

 

 

(5,579

)

Common stock acquired and canceled

 

 

 

 

 

(5,423

)

Balance at end of period

 

$

593,631

 

 

$

541,098

 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

Unrealized gains on securities:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

94

 

 

$

1,527

 

Net change

 

 

(178

)

 

 

530

 

Balance at end of period

 

$

(84

)

 

$

2,057

 

Total stockholders’ equity

 

$

729,873

 

 

$

662,661

 

 

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

 

4


BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(Dollars in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2017

 

 

2016

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income

 

$

22,050

 

 

$

16,579

 

Adjustments to reconcile to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

72

 

 

 

4,103

 

Depreciation and amortization

 

 

2,967

 

 

 

3,111

 

Net amortization of securities premiums and discounts

 

 

(47

)

 

 

148

 

Realized securities gains

 

 

 

 

(100

)

Gain on sales of loans

 

 

(632

)

 

 

(562

)

Cash receipts from the sale of loans originated for sale

 

 

43,005

 

 

 

40,271

 

Cash disbursements for loans originated for sale

 

 

(40,826

)

 

 

(33,610

)

Deferred income tax benefit

 

 

(485

)

 

 

(829

)

Loss/(gain) on other assets

 

 

35

 

 

 

(1,222

)

Decrease/(increase) in interest receivable

 

 

598

 

 

 

(176

)

Increase in interest payable

 

 

22

 

 

 

13

 

Amortization of stock-based compensation arrangements

 

 

222

 

 

 

451

 

Excess tax benefit from stock-based compensation arrangements

 

 

(376

)

 

 

Other, net

 

 

5,310

 

 

 

300

 

Net cash provided by operating activities

 

$

31,915

 

 

$

28,477

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Net decrease in federal funds sold

 

 

500

 

 

 

Purchases of available for sale securities

 

 

(20,511

)

 

 

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

 

 

361

 

 

 

410

 

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

 

 

26,489

 

 

 

55,071

 

Proceeds from sales of available for sale securities

 

 

 

 

299

 

Net change in loans

 

 

7,366

 

 

 

(45,010

)

Purchases of premises, equipment and computer software

 

 

(3,369

)

 

 

(2,939

)

Proceeds from the sale of other real estate owned and other assets

 

 

1,186

 

 

 

5,971

 

Net cash provided by investing activities

 

 

12,022

 

 

 

13,802

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Net change in deposits

 

 

146,570

 

 

 

37,514

 

Net increase in short-term borrowings

 

 

300

 

 

 

800

 

Issuance of common stock, net

 

 

2,752

 

 

 

693

 

Common stock acquired

 

 

 

 

(5,523

)

Cash dividends paid

 

 

(6,008

)

 

 

(5,615

)

Net cash provided by financing activities

 

 

143,614

 

 

 

27,869

 

Net increase in cash, due from banks and interest-bearing deposits

 

 

187,551

 

 

 

70,148

 

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

 

 

1,850,461

 

 

 

1,598,177

 

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

 

$

2,038,012

 

 

$

1,668,325

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

4,235

 

 

$

3,591

 

Cash paid during the period for income taxes

 

$

1,100

 

 

$

1,050

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Unpaid common stock dividends declared

 

$

6,028

 

 

$

5,579

 

 

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, 2016.

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, 2016, 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, 2016, the date of the most recent annual report.

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

Standards Adopted During Current Period:

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-08, “Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. The Company opted for early adoption of ASU 2017-08, as was permitted, on January 1, 2017. ASU 2017-08 did not have a significant impact on the Company’s financial statements and no prior periods were adjusted.

In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interests Held Through Related Parties That Are Under Common Control.” ASU 2016-17 updates ASU No. 2015-02 to amend the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (“VIE”) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. ASU 2016-17 was adopted on January 1, 2017 and did not have a significant impact on the Company’s financial statements and no prior periods were adjusted.

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

6


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 allows entities to make an entity-wide accounting policy election to account for forfeitures when they occur, which the Company has elected to do. 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 was adopted on January 1, 2017 and did not have a significant impact on the Company’s financial statements. In addition, ASU 2016-09 was applied prospectively and no prior periods were adjusted. The excess tax benefit for share-based payment awards that vested or were exercised during the three months ended March 31, 2017 was approximately $376,000.

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.  ASU 2014-15 was adopted on January 1, 2017. Adoption of ASU 2014-15 did not have a significant effect on the Company’s financial statements.

Standards Not Yet Adopted:

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 removes the second step of goodwill testing. ASU 2017-04 will be effective on January 1, 2020 and is not expected to have a significant impact on the Company’s financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of a business. ASU 2017-01 will be effective on January 1, 2018 and is not expected to have a significant impact on the Company’s financial statements.

In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory.” ASU 2016-16 provides guidance stating that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 will be effective on January 1, 2018 and is not expected to have a significant impact on the Company’s financial statements.

In August 2016, the FASB issued 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.

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 effect 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 effect on the Company’s financial statements.

7


In January of 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customer (Topic 606).” ASU 2014-09 implements a comprehensive new revenue recognition standard that will supersede substantially all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in a manner that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, which comprises a significant portion of the Company’s revenue stream. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606).” ASU 2015-14 is an amendment to defer the effective date of ASU N. 2014-09. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. Adoption of ASU 2014-09 may require the Company to amend how it recognizes certain recurring revenue streams related to trust fees, which are recorded in non-interest expense; however, the Company does not expect the adoption of ASU 2014-09 to have a significant impact on the Company’s financial statements.

 

 

 

 

(2)

SECURITIES

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

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Dollars in thousands)

 

Held for investment, at cost (fair value: $4,038 and $4,403, respectively)

 

$

4,003

 

 

$

4,365

 

Available for sale, at fair value

 

 

459,247

 

 

 

465,468

 

Total

 

$

463,250

 

 

$

469,833

 

 

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

 

March 31, 2017

 

(Dollars in thousands)

 

Mortgage backed securities (1)

 

$

233

 

 

$

15

 

 

$

 

 

$

248

 

States and political subdivisions

 

 

3,270

 

 

 

22

 

 

 

(2

)

 

 

3,290

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

4,003

 

 

$

37

 

 

$

(2

)

 

$

4,038

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage backed securities (1)

 

$

252

 

 

$

17

 

 

$

 

 

$

269

 

States and political subdivisions

 

 

3,613

 

 

 

25

 

 

 

(4

)

 

 

3,634

 

Other securities

 

 

500

 

 

 

 

 

 

 

 

 

500

 

Total

 

$

4,365

 

 

$

42

 

 

$

(4

)

 

$

4,403

 

8


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

 

March 31, 2017

 

(Dollars in thousands)

 

U.S. treasuries

 

$

289,248

 

 

$

723

 

 

$

(538

)

 

$

289,433

 

U.S. federal agencies

 

 

105,166

 

 

 

307

 

 

 

(415

)

 

 

105,058

 

Mortgage backed securities (1)

 

 

19,369

 

 

 

271

 

 

 

(567

)

 

 

19,073

 

States and political subdivisions

 

 

38,856

 

 

 

853

 

 

 

(71

)

 

 

39,638

 

Other securities (2)

 

 

6,746

 

 

 

125

 

 

 

(826

)

 

 

6,045

 

Total

 

$

459,385

 

 

$

2,279

 

 

$

(2,417

)

 

$

459,247

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

$

268,763

 

 

$

700

 

 

$

(920

)

 

$

268,543

 

U.S. federal agencies

 

 

129,674

 

 

 

373

 

 

 

(405

)

 

 

129,642

 

Mortgage backed securities (1)

 

 

19,949

 

 

 

290

 

 

 

(567

)

 

 

19,672

 

States and political subdivisions

 

 

40,335

 

 

 

836

 

 

 

(129

)

 

 

41,042

 

Other securities (2)

 

 

6,594

 

 

 

125

 

 

 

(150

)

 

 

6,569

 

Total

 

$

465,315

 

 

$

2,324

 

 

$

(2,171

)

 

$

465,468

 

 

 

(1)

Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.

 

(2)

Primarily consists of equity securities.

 

The maturities of securities held for investment and available for sale are summarized in the following table using contractual maturities. Actual maturities may differ from contractual maturities due to obligations that are called or prepaid. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

Amortized

Cost

 

 

Estimated

Fair

Value

 

 

 

(Dollars in thousands)

 

Held for Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual maturity of debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

1,563

 

 

$

1,573

 

 

$

1,561

 

 

$

1,568

 

After one year but within five years

 

 

1,751

 

 

 

1,762

 

 

 

1,937

 

 

 

1,951

 

After five years but within ten years

 

 

673

 

 

 

687

 

 

 

707

 

 

 

723

 

After ten years

 

 

16

 

 

 

16

 

 

 

160

 

 

 

161

 

Total

 

$

4,003

 

 

$

4,038

 

 

$

4,365

 

 

$

4,403

 

Available for Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual maturity of debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Within one year

 

$

75,206

 

 

$

75,378

 

 

$

66,542

 

 

$

66,662

 

After one year but within five years

 

 

308,182

 

 

 

308,229

 

 

 

320,150

 

 

 

319,839

 

After five years but within ten years

 

 

6,318

 

 

 

6,666

 

 

 

5,830

 

 

 

6,152

 

After ten years

 

 

62,933

 

 

 

62,929

 

 

 

66,199

 

 

 

66,246

 

Total debt securities

 

 

452,639

 

 

 

453,202

 

 

 

458,721

 

 

 

458,899

 

Equity securities

 

 

6,746

 

 

 

6,045

 

 

 

6,594

 

 

 

6,569

 

Total

 

$

459,385

 

 

$

459,247

 

 

$

465,315

 

 

$

465,468

 

The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

(Dollars in thousands)

 

Book value of pledged securities

 

$

432,232

 

 

$

439,692

 

 

 

9


(3)

LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

 

 

 

March 31, 2017

 

 

December 31, 2016

 

 

 

Amount

 

 

Percent

 

 

Amount

 

 

Percent

 

 

 

(Dollars in thousands)

 

Commercial and financial:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

834,561

 

 

 

19.01

%

 

$

828,260

 

 

 

18.82

%

Oil & gas production and equipment

 

 

84,976

 

 

 

1.93

 

 

 

84,228

 

 

 

1.91

 

Agriculture

 

 

139,542

 

 

 

3.18

 

 

 

144,751

 

 

 

3.29

 

State and political subdivisions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

32,597

 

 

 

0.74

 

 

 

33,793

 

 

 

0.77

 

Tax-exempt

 

 

48,313

 

 

 

1.10

 

 

 

47,283

 

 

 

1.07

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

417,148

 

 

 

9.50

 

 

 

420,884

 

 

 

9.57

 

Farmland

 

 

201,450

 

 

 

4.59

 

 

 

197,872

 

 

 

4.50

 

One to four family residences

 

 

843,731

 

 

 

19.22

 

 

 

846,360

 

 

 

19.24

 

Multifamily res