Business Overview and History BancFirst Corporation (NASDAQ:BANF) is a financial holding company headquartered in Oklahoma City, Oklahoma, that conducts the majority of its operating activities through its wholly-owned subsidiary, BancFirst, an Oklahoma state-chartered bank. The company has established itself as a regional banking powerhouse, delivering consistent growth and strong financial performance over the years.
BancFirst Corporation was incorporated as United Community Corporation in July 1984 to become a bank holding company. In June 1985, it merged with seven Oklahoma bank holding companies that had operated under common ownership, and the company has conducted business as a bank holding company since that time. Over the next several years, the company acquired additional banks and bank holding companies, and in November 1988, the company changed its name to BancFirst Corporation.
Effective April 1, 1989, the company consolidated its 12 subsidiary banks and formed BancFirst. Over the intervening decades, the company has continued to expand through acquisitions and de-novo branches. As of December 31, 2024, BancFirst had 104 banking locations serving 59 communities throughout Oklahoma, while its wholly-owned subsidiaries, Pegasus Bank and Worthington Bank, had a combined total of 6 banking locations in the Dallas and Fort Worth Metroplex areas of Texas.
BancFirst's strategy focuses on providing a full range of commercial banking services to retail customers and small to medium-sized businesses in both the non-metropolitan trade centers and cities in the metropolitan statistical areas of Oklahoma. The company maintains a strong community orientation by selecting members of the communities in which its branches operate to local consulting boards that assist in marketing and providing feedback on BancFirst's products and services to meet customer needs.
The banking environment in Oklahoma is highly competitive, with BancFirst facing competition from other banking institutions, savings and loan associations, brokerage firms, personal loan finance companies, and credit unions within their respective market areas. However, the company's decentralized management approach, which allows for local decision-making, as well as its larger lending capacity and broader product line compared to many of its competitors in the non-metropolitan areas, has enabled BancFirst to develop long-term customer relationships and maintain high-quality service. Over its multi-decade history, the company has successfully navigated these competitive challenges to become one of the largest banks headquartered in Oklahoma.
Financial Performance and Ratios BancFirst Corporation has demonstrated a track record of consistent financial performance and growth. For the fiscal year ended December 31, 2024, the company reported net income of $216.4 million, or $6.44 per diluted share, compared to $212.5 million, or $6.34 per diluted share, for the previous fiscal year.
Financials The company's net interest income increased to $446.9 million in 2024, up from $424.5 million in 2023, primarily driven by higher interest rates and loan volume. However, the company's net interest margin decreased slightly to 3.73% in 2024 from 3.79% in 2023, as the increase in rates on interest-bearing deposits partially offset the benefits of higher interest rates and loan volume.
BancFirst's return on assets (ROA) was 1.68% in 2024, down from 1.75% in 2023, while its return on equity (ROE) was 14.23% in 2024, down from 15.89% in 2023. The company's efficiency ratio, which measures the ratio of noninterest expense to net interest income plus noninterest income, was 54.98% in 2024, compared to 54.51% in 2023.
For the fiscal year 2024, BancFirst reported annual revenue of $631.5 million, annual net income of $216.4 million, annual operating cash flow of $261.2 million, and annual free cash flow of $224.6 million. In the most recent quarter (Q4 2024), the company reported revenue of $162.9 million, representing a 0.64% year-over-year increase, and net income of $56.5 million.
Liquidity As of December 31, 2024, BancFirst's total assets stood at $13.55 billion, up from $12.37 billion at the end of 2023. The company's loan portfolio grew by 4.8% in 2024, reaching $8.03 billion, while its deposit base increased by 9.4% to $11.72 billion. BancFirst's capital ratios remained well above regulatory requirements, with a Common Equity Tier 1 ratio of 16.41% and a Total Risk-Based Capital ratio of 18.49% as of the end of 2024.
The company's debt-to-equity ratio was 0.053, indicating a conservative capital structure. BancFirst held $3.55 billion in cash and cash equivalents, providing ample liquidity. The company also maintained several undrawn credit lines, including an $877.1 million line of credit from the FHLB of Topeka for BancFirst, a $126.2 million Federal Reserve discount window capacity for Pegasus, and a combination of a $126.2 million Federal Reserve discount window capacity, an $85.6 million FHLB of Dallas line of credit, and $10.5 million in other financial institution lines for Worthington. All of these credit lines had no outstanding advances as of the end of 2024.
Business Segments BancFirst Corporation operates through several principal business units:
1. BancFirst Metropolitan Banks: This segment consists of banking locations in the metropolitan Oklahoma City and Tulsa areas. In 2024, it reported interest income of $211.5 million, interest expense of $94.4 million, and income before taxes of $93.6 million. Total loans held for investment were $2.44 billion, with total assets of $3.54 billion.
2. BancFirst Community Banks: This unit comprises banking locations in Oklahoma communities outside the Oklahoma City and Tulsa metropolitan areas. In 2024, it reported interest income of $414.6 million, interest expense of $165.0 million, and income before taxes of $168.1 million. Total loans held for investment were $4.07 billion, with total assets of $7.81 billion.
3. Pegasus: This segment covers banking locations in the Dallas metropolitan area. In 2024, it reported interest income of $80.5 million, interest expense of $32.5 million, and income before taxes of $23.6 million. Total loans held for investment were $886.8 million, with total assets of $1.42 billion.
4. Worthington: This unit consists of banking locations in the Arlington, Fort Worth, and Denton, Texas areas. In 2024, it reported interest income of $32.2 million, interest expense of $13.5 million, and income before taxes of $4.2 million. Total loans held for investment were $453.6 million, with total assets of $644.9 million.
5. Other Financial Services: This segment includes specialty product business units such as guaranteed small business lending, residential mortgage lending, trust services, securities brokerage, electronic banking, and insurance. In 2024, it reported interest income of $9.8 million, interest expense of $4.8 million, and income before taxes of $22.5 million.
6. Executive, Operations and Support: This group represents executive management, operational support, and corporate functions not allocated to other business units. In 2024, it reported interest income of $19.4 million, interest expense of $27.8 million, and income before taxes of $183.9 million.
Expansion and Acquisition Strategy BancFirst has a long history of strategic acquisitions and de-novo branch openings to expand its geographic footprint and customer base. In July 2023, the company announced the purchase of approximately $2.5 million in total assets, including $2.1 million in loans, and the assumption of $10.8 million in deposits and other obligations from RCB Banks' Stroud, Oklahoma branch. This transaction strengthened BancFirst's presence in the Stroud community.
The company's acquisition strategy has allowed it to grow its franchise and diversify its revenue streams, while its de-novo branch openings have enabled it to penetrate new markets and better serve its customer base. BancFirst's disciplined approach to growth and its focus on maintaining strong asset quality have been key drivers of its consistent financial performance.
Risks and Challenges Like any financial institution, BancFirst faces a variety of risks and challenges that could impact its future performance. These include interest rate risk, credit risk, liquidity risk, and operational risk, among others. The company's exposure to the energy industry, particularly the oil and gas sector, also presents a potential risk, as fluctuations in commodity prices could impact the creditworthiness of its energy-related borrowers.
Additionally, the banking industry as a whole is subject to a high degree of regulation, and changes in laws, regulations, or policies could have a material effect on BancFirst's business and operations. The company must also navigate the ongoing technological advancements in the financial services industry, ensuring that it can provide the digital products and services that its customers demand.
The banking industry has seen increased competition for deposits and higher deposit costs due to the rising interest rate environment. BancFirst has also been impacted by the Durbin Amendment, which reduced debit card interchange fees starting in July 2023, resulting in a $10.8 million reduction in 2024 interchange revenue compared to the prior year.
Human Capital Resources As of December 31, 2024, BancFirst Corporation employed 2,130 full-time equivalent employees. The company focuses on providing fair compensation, training, employee development, and a positive work culture to retain and motivate its workforce. This approach has contributed to the company's ability to maintain a stable and experienced team to support its operations and growth initiatives.
Climate-Related and ESG Developments In recent years, there has been increased regulatory focus on climate-related disclosures and broader environmental, social, and governance (ESG) matters. BancFirst Corporation continues to monitor these developments and enhance its risk management and reporting practices accordingly. The company recognizes the importance of addressing ESG concerns and is working to integrate these considerations into its overall business strategy and operations.
Conclusion BancFirst Corporation has established itself as a regional banking powerhouse, delivering consistent growth and strong financial performance over the years. The company's disciplined approach to expansion, focus on maintaining asset quality, and commitment to serving its local communities have been key drivers of its success. Its diversified business model, with a focus on traditional banking services across metropolitan and community bank locations, as well as specialty financial services, has allowed the company to generate stable and consistent financial performance.
While the company faces a variety of risks and challenges, including increased competition for deposits and regulatory changes, its proven track record, experienced management team, and strong capital position it well to navigate the evolving banking landscape and continue delivering value to its shareholders. As BancFirst continues to adapt to industry trends and regulatory developments, including ESG considerations, it remains poised for continued growth and success in the regional banking sector.