BancFirst (BANF) - 2024 Q2 - Quarterly Report

PART I – Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the period ending June 30, 2024 Consolidated Balance Sheets Total assets grew to $12.74 billion, driven by increases in net loans, deposits, and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 (unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $12,737,318 | $12,372,042 | | Loans, net of allowance | $7,947,822 | $7,559,845 | | Total Deposits | $11,015,602 | $10,700,122 | | Total Liabilities | $11,224,826 | $10,938,151 | | Total Stockholders' Equity | $1,512,492 | $1,433,891 | Consolidated Statements of Comprehensive Income Net income declined year-over-year for both Q2 and the six-month period due to lower noninterest income and higher expenses Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $109,896 | $105,926 | $216,000 | $215,082 | | Provision for Credit Losses | $3,358 | $2,824 | $7,373 | $5,146 | | Total Noninterest Income | $43,944 | $47,974 | $88,844 | $95,802 | | Total Noninterest Expense | $85,316 | $81,110 | $168,095 | $161,427 | | Net Income | $50,641 | $55,010 | $100,975 | $112,543 | | Diluted EPS | $1.51 | $1.64 | $3.01 | $3.36 | Consolidated Statements of Stockholders' Equity Stockholders' equity grew to $1.51 billion, supported by net income that was partially offset by increased dividend payments - Total stockholders' equity grew to $1,512,492 thousand at the end of Q2 2024, up from $1,340,791 thousand at the end of Q2 2023[12] - For the six months ended June 30, 2024, net income contributed $100,975 thousand to retained earnings, while dividends paid on common stock amounted to $28,375 thousand[12] - Dividends per common share increased year-over-year, with $0.43 paid in Q2 2024 compared to $0.40 in Q2 2023[12] Consolidated Statements of Cash Flow Net cash increased by $95.8 million in the first half of 2024, as operating and financing inflows offset investing outflows Six Months Ended June 30 Cash Flow Summary (in thousands) | Cash Flow Category | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $166,475 | $129,180 | | Net Cash from Investing Activities | ($361,268) | ($369,160) | | Net Cash from Financing Activities | $290,622 | ($519,788) | | Net Change in Cash | $95,829 | ($759,768) | Notes to Consolidated Financial Statements This section provides detailed disclosures on accounting policies, financial instruments, and segment information - The financial statements are prepared in conformity with U.S. GAAP and include all normal and recurring adjustments necessary for a fair presentation[14][17] - The company is evaluating new accounting standards but does not expect them to have a material impact on its consolidated financial statements[20][21] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes the Q2 2024 net income decrease, attributing it to lower interchange fees and higher expenses despite loan-driven asset growth - Q2 2024 net income was $50.6 million ($1.51 per diluted share), down from $55.0 million ($1.64 per diluted share) in Q2 2023[139] - The primary reason for the decrease in noninterest income was a $5.7 million reduction in interchange fees due to the Durbin Amendment[140] - Total assets reached $12.7 billion, an increase of $365.3 million from year-end 2023, mainly from loan growth[141] - Nonaccrual loans increased to 0.55% of total loans, up from 0.32% at year-end 2023[141] Results of Operations Q2 2024 net interest income rose on higher loan volume, but the net interest margin declined and noninterest income fell Volume/Rate Analysis of Net Interest Income Change (Q2 2024 vs Q2 2023, in thousands) | Component | Change Due to Volume | Change Due to Rate | Total Change | | :--- | :--- | :--- | :--- | | Total Interest Income | $12,961 | $14,725 | $27,686 | | Total Interest Expense | $9,312 | $14,365 | $23,677 | | Net Interest Income | $3,649 | $360 | $4,009 | - Noninterest income in Q2 2024 was significantly impacted by a $5.7 million reduction in interchange fees due to the Durbin Amendment, which became effective for the company on July 1, 2023[161][163] - Noninterest expense for Q2 2024 increased by $4.2 million year-over-year, primarily due to a $2.1 million growth in salaries and employee benefits[164] Financial Position Total assets reached $12.7 billion, driven by 5.2% loan growth since year-end, while nonaccrual loans also increased - Total loans increased by $394.7 million (5.2%) from December 31, 2023, to June 30, 2024, reaching $8.1 billion[141][172] - Nonaccrual loans rose to $44.0 million at June 30, 2024, from $24.6 million at December 31, 2023[174] - Other Real Estate Owned (OREO) included a large commercial property valued at $30.7 million, which saw $1.3 million in tenant improvements during the first half of 2024[178] Liquidity and Capital Resources The company maintains strong liquidity through a stable core deposit base and holds capital ratios well above regulatory minimums - The company is highly liquid, with cash, due from banks, and federal funds sold representing 19.6% of total assets[184] - Noninterest-bearing deposits decreased to 34.6% of total deposits from 37.2% at year-end 2023, as funds shifted to interest-bearing accounts[186] - Stockholders' equity grew to $1.5 billion, an increase of $78.6 million from December 31, 2023, supported by $101.0 million in net income[189] Quantitative and Qualitative Disclosure About Market Risk The company reports no significant changes in its market risk disclosures since the end of the 2023 fiscal year - There have been no significant changes in the Company's disclosures regarding market risk since December 31, 2023[191] Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls during the quarter - The Company's CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by this report[192] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, such controls[192] PART II – Other Information Legal Proceedings The company is involved in routine legal actions that are not expected to materially impact its financial condition - The Company is a defendant in various legal actions from normal business activities, but any resulting liability is not expected to have a material adverse effect on its financial statements[193] Risk Factors No material changes to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K are reported - As of June 30, 2024, there have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023[194] Other Part II Items The report confirms no disclosures for unregistered equity sales, senior security defaults, mine safety, or other information - Item 2: No unregistered sales of equity securities[194] - Item 3: No defaults upon senior securities[194] - Item 4: No mine safety disclosures[194] - Item 5: No other information to report[194] Exhibits This section lists filed exhibits, including CEO/CFO certifications and XBRL data files, and incorporates others by reference - Exhibit 31.1 and 31.2: Certifications by the Chief Executive Officer and Chief Financial Officer are filed with the report[198][199] - Exhibit 32: CEO & CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act is furnished[200] - Exhibit 101 and 104: Inline XBRL documents are included[201][202] Signatures Signatures The report is duly signed by the President/CEO and EVP/CFO on behalf of the corporation on August 6, 2024 - The report was signed on August 6, 2024[206] - Authorized signatories include David Harlow (Principal Executive Officer) and Hannah Andrus (Principal Financial Officer)[206]