BANCFIRST CORP /OK/

BancFirst Corp. (BANF) Reports Record-Breaking 2023 Results

Event Description (what happened) BancFirst Corp. (NASDAQ: BANF) wrapped up 2023 with some seriously strong financial results, marking its fifth year in a row of record net income and earnings per share. The company saw significant growth for both the fourth quarter and the full year, which ended on December 31, 2023. This impressive performance was largely thanks to more loans, a smart acquisition, and really solid asset quality.

Event Date/Timeline BancFirst shared these financial results on January 22, 2024, covering the fourth quarter and the entire year of 2023. They also completed their acquisition of American Bank of Oklahoma (ABOK) in November 2023 and expect to have it fully integrated during the first quarter of 2024.

Financial Impact (if applicable)

• Record Net Income & EPS: BancFirst reported fourth-quarter 2023 net income of $59.5 million, or $1.75 per diluted share. That's up from $56.5 million ($1.68 per diluted share) in Q4 2022. For the full year 2023, net income climbed to a whopping $240.6 million, compared to $216.4 million in 2022.
• Net Interest Income (NII) & Margin (NIM): NII rose to $127.7 million in Q4 2023, mainly because of higher loan balances and better interest rates on their earning assets. While the exact Net Interest Margin (NIM) wasn't detailed, the bank did mention that this key profitability measure improved.
• Noninterest Income: This included a nice $4.5 million gain from selling some Visa B-1 stock.
• Noninterest Expense: Total noninterest expense went up, mostly due to a significant increase in costs related to "other real estate owned" (OREO), which means they had some property write-downs.
• Balance Sheet Growth: Total loans grew by about 10% year-over-year to $11.5 billion, and total deposits increased 5% to $12.8 billion. By the end of 2023, total assets reached $15.0 billion.
• Profitability Ratios: For the full year, their return on average assets (ROAA) was 1.65%, and return on average equity (ROAE) was 15.2%, showing they're using their capital efficiently.
• Capital Strength: The bank kept its capital ratios strong, with a Common Equity Tier 1 ratio of 12.5% and a Total Capital ratio of 14.8%. Both are comfortably above what regulators require, which is a good sign of a solid financial foundation.
• Asset Quality: BancFirst actually reported a reversal of its provision for credit losses, which is a fancy way of saying their loans are performing really well. Nonaccrual loans stayed low and stable at just 0.35% of total loans, showing they're managing risk effectively.
• Dividend Increase: Good news for shareholders! The annual cash dividend went up from $1.78 per share in 2022 to $1.90 per share in 2023.

Impact Assessment (who/what is affected) BancFirst's stellar 2023 performance really came down to their focus on growing loans organically and making smart acquisitions. The acquisition of American Bank of Oklahoma (ABOK) in November 2023 was a big deal, significantly expanding BancFirst's footprint, especially in the Tulsa area, and adding about $600 million in assets. This move fits right into their strategy to grow geographically and get into new markets. Plus, a favorable interest rate environment certainly helped boost their net interest income. CEO David Harlow did acknowledge a "mixed" economic outlook, which suggests they're being careful but proactive about managing growth and credit quality.

This report really highlights BancFirst's consistent excellence and smart execution. Five years in a row of record earnings, along with strong loan and deposit growth, tells us this is a healthy, expanding business. And that increased annual cash dividend (from $1.78 per share in 2022 to $1.90 per share in 2023) directly benefits shareholders and shows management's confidence in future profits.

While things look great overall, it's worth keeping an eye on that increase in OREO-related expenses, even though their overall asset quality remains strong. The CEO's "mixed" economic outlook hints at potential challenges, so the bank's continued focus on credit quality and risk management will be super important.

Looking ahead, BancFirst expects to fully integrate American Bank of Oklahoma in the first quarter of 2024, which should bring even more efficiency and market benefits. BancFirst plans to keep prioritizing disciplined loan growth, strong credit quality, and strategic opportunities, especially in fast-growing areas like Dallas-Fort Worth. Their strong capital position gives them flexibility for future plans and helps them stay resilient if the economy shifts.

Key Takeaways for Investors

• Consistent Performance: BancFirst has a solid track record of making money and growing.
• Growth Drivers: Expanding loans and smart acquisitions are key to their ongoing success.
• Shareholder Returns: The higher dividend shows they're committed to giving value back to shareholders.
• Risk Awareness: Keep an eye on those OREO expenses and the broader economic picture, just as management pointed out.
• Strategic Vision: The ABOK acquisition and their focus on key markets are central to BancFirst's long-term plan.

If you're thinking about investing, it's always a good idea to check out the full 8-K filing and listen to the earnings call for all the details on BancFirst's financial health and future.