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| BANF > SEC Filings for BANF > Form 10-Q on 11-May-2009 | All Recent SEC Filings |
11-May-2009
Quarterly Report
SUMMARY
Net income for the first quarter of 2009 was $7.1 million compared to $11.6 million for the first quarter of 2008. Diluted net income per share was $0.46 and $0.74 for the first quarter of 2009 and 2008, respectively. The results for 2008 included a $1.2 million after-tax gain related to the Visa initial public offering.
Total assets at March 31, 2009 were $4.0 billion, up $172 million or 4.5% from a year ago. Total loans were $2.8 billion, an increase of $308 million or 12.3% from March 31, 2008. At quarter end total deposits were $3.5 billion, up $170 million or 5.2% from the previous year. Stockholders' equity was $416 million or 10.5% of total assets as of March 31, 2009, an increase of $30 million from a year ago. The Company's liquidity remains strong as its average loan to deposit ratio was 83.3% at quarter end and core deposits represented 89.6% of total deposits. The Company had no brokered deposits and no Federal Home Loan Bank borrowings.
Compared to year end 2008, total assets grew by $91 million from $3.9 billion. Loans increased by $51 million from December 31, 2008 while deposits were up by $91 million. At March 31, 2009 the Company's stockholders equity was $416 million compared to $414 million at December 31, 2008.
On November 18, 2008 the Company announced it will not accept funds from the U.S. Treasury's Capital Purchase Program due to current capital levels that exceed well-capitalized guidelines and the potential for additional governmental regulation related to the program. Also, the Company did not elect to participate in the Debt Guarantee Program for newly issued senior unsecured debt. The Company did elect to participate in the Transaction Account Guarantee Program for extended coverage on non-interest bearing transaction deposit accounts.
In April 2008, the Company completed an $80 million sale of securities resulting in a securities pre-tax gain of $6.1 million. The transactions resulted in the sale of $80 million of US Treasury securities and the purchase of Government Sponsored Enterprises (GSE) senior debt securities of similar amounts and maturities. The after-tax gain related to these transactions, net of the interest income differential, was approximately $3.3 million for the year.
In March 2008, the Company, as a member bank of Visa, recorded a $1.8 million pre-tax gain from the mandatory partial redemption of the Company's Visa shares received in the first quarter initial public offering. The gain was included in gain on sale of other assets.
RESULTS OF OPERATIONS
First Quarter
Net interest income totaled $31.8 million, a decrease of $3.6 million, or 10.3%, compared to the first quarter of 2008. The Company's net interest margin (on a taxable equivalent basis) was 3.69% compared to 4.03% for the same period a year ago. The lower interest rate environment in 2009 compared to a year ago has caused the Company's net interest margin to decline. From March 31, 2008 earning assets increased $148 million to $3.5 billion. The volume variance impact on the net interest margin was a positive $5.2 million which was more than offset by the rate variance impact of a negative $8.8 million.
The Company's provision for loan losses was $3.4 million compared to $1.8 million during the same period a year ago. The increase in the loan loss provision was due to a number of specific credits and the overall slowdown in the economy. Net loan charge-offs were $890,000 for the first quarter of 2009, compared to $714,000 for the first quarter of 2008. The net charge-offs represent a rate of 0.13% of average total loans for the first quarter of 2009 compared to 0.12% for the same period in 2008.
Noninterest income was $16.6 million for the quarter, up $1.2 million or 7.8% over operating noninterest income for the same quarter a year ago, excluding the $1.8 million pretax gain related to the Visa initial public offering. The increase in core noninterest income was due to commercial deposit fees and treasury and cash management services. Noninterest expense of $34.5 million was up 10.9% from the operating expenses a year ago due primarily to higher FDIC premiums and other operating expenses. The Company's effective tax rate was 32.0% for the quarter compared to 35.3% a year ago due to federal and state tax credits.
FINANCIAL POSITION
The aggregate of cash and due from banks, interest-bearing deposits with banks, and federal funds sold as of March 31, 2009 increased $51 million from December 31, 2008 but decreased $124 million from March 31, 2008. The increase from year-end was mainly from deposit growth in early 2009. The decrease from the previous year mainly resulted from a decrease in federal funds sold to help fund loan growth. Due to the Federal Reserve Bank's intervention into the Federal funds market that has resulted in near zero overnight fed funds rates, the Company has maintained its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period.
Total securities decreased $16 million compared to December 31, 2008 and $24 million compared to March 31, 2008. The size of the Company's securities portfolio is a function of liquidity management and excess funds available for investment. The Company has maintained a very liquid securities portfolio to provide funds for loan growth. The net unrealized gain on securities available for sale, before taxes, was $17.3 million at the end of the first quarter of 2009, compared to $18.3 million at March 31, 2008. The decrease in unrealized gains from March 31, 2008 to March 31, 2009 was due in part to the realization of securities gains resulting from the $80 million sale of securities previously discussed. The average taxable equivalent yield on the securities portfolio for the first quarter of 2009 decreased to 3.74% from 4.36% for the same quarter of 2008. The Company does not own any equity securities issued by Fannie Mae or Freddie
Total loans increased $51 million from December 31, 2008 and $308 million from March 31, 2008. The increase compared to year end and first quarter 2008 was due to internal loan growth in commercial and student loans. The allowance for loan losses increased $2.5 million from year-end 2008 and $6.6 million from the first quarter of 2008. The allowance as a percentage of total loans was 1.31%, 1.24% and 1.21% at March 31, 2009, December 31, 2008 and March 31, 2008, respectively. The allowance to nonperforming and restructured loans at the same dates was 138.87%, 144.52% and 225.34%, respectively.
Nonperforming and restructured loans totaled $26.5 million at March 31, 2009, compared to $23.7 million at December 31, 2008 and $13.4 million at March 31, 2008. The ratio of nonperforming and restructured loans to total loans for the same periods was 0.94%, 0.86% and 0.54%, respectively. The level of nonperforming loans and loan losses may rise over time as a result of economic and credit cycles.
Potential problem loans are performing loans to borrowers with a weakened financial condition, or which are experiencing unfavorable trends in their financial condition, which causes management to have concerns as to the ability of such borrowers to comply with the existing repayment terms. The Company had approximately $68.4 million of these loans at March 31, 2009 compared to $66.8 million at December 31, 2008 and $54.8 million at March 31, 2008. These loans are not included in nonperforming and restructured assets. In general, these loans are adequately collateralized and have no specific identifiable probable loss. Loans which are considered to have identifiable loss potential are generally placed on nonaccrual status, are allocated a specific allowance for loss or are directly charged-down, and are reported as nonperforming. The Company's nonaccrual loans are primarily commercial and real estate loans.
Total deposits increased $94 million compared to December 31, 2008, and $169 million compared to March 31, 2008 due to internal growth. The Company's deposit base continues to be comprised substantially of core deposits, with large denomination certificates of deposit being only 10.5% of total deposits at March 31, 2009, compared to 10.0% at December 31, 2008 and 10.3% at March 31, 2008.
Short-term borrowings decreased $2 million from December 31, 2008, and $30 million from March 31, 2008. Fluctuations in short-term borrowings are a function of federal funds purchased from correspondent banks, customer demand for repurchase agreements and liquidity needs of the bank.
Long-term borrowings decreased $507,000 from the first quarter of 2008. The decrease since the first quarter of 2008 was due to scheduled principal payments and early payoff of the note payable related to the acquisition of Armor Assurance Company.
Stockholders' equity was $416 million at March 31, 2009 which was an increase of $3 million from year-end 2008 and an increase of $30 million from the first quarter of 2008 due to accumulated earnings. Average stockholders' equity to average assets for the first quarter of 2009 was 10.85%, compared to 10.27% for the first quarter of 2008. The Company's leverage ratio and total risk-based capital ratio were 9.90% and 14.04%, respectively, at March 31, 2009, well in excess of the regulatory minimums.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note (2) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.
SEGMENT INFORMATION
See note (13) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.
The Company may make forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 with respect to earnings, credit quality, corporate
objectives, interest rates and other financial and business matters.
Forward-looking statements include estimates and give management's current
expectations or forecasts of future events. The Company cautions readers that
these forward-looking statements are subject to numerous assumptions, risks and
uncertainties, including economic conditions, the performance of financial
markets and interest rates; legislative and regulatory actions and reforms;
competition; as well as other factors, all of which change over time. Actual
results may differ materially from forward-looking statements.
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
2009 2008
Per Common Share Data
Net income - basic $ 0.47 $ 0.76
Net income - diluted 0.46 0.74
Cash dividends 0.22 0.20
Performance Data
Return on average assets 0.75 % 1.26 %
Return on average stockholders' equity 6.92 12.24
Cash dividend payout ratio 46.81 26.32
Net interest spread 3.06 3.35
Net interest margin 3.69 4.24
Efficiency ratio 71.38 62.57
Net charge-offs 0.13 0.12
March 31, December 31,
2009 2008 2008
Balance Sheet Data
Book value per share $ 27.23 $ 25.43 $ 27.08
Tangible book value per share 24.51 22.65 24.34
Average loans to deposits (year-to-date) 83.29 % 76.91 % 78.82 %
Average earning assets to total assets
(year-to-date) 91.51 91.27 91.23
Average stockholders' equity to average assets
(year-to-date) 10.85 10.27 10.35
Asset Quality Ratios
Nonperforming and restructured loans to total
loans 0.94 % 0.54 % 0.86 %
Nonperforming and restructured assets to total
assets 0.81 0.41 0.72
Allowance for loan losses to total loans 1.31 1.21 1.24
Allowance for loan losses to nonperforming and
restructured loans 138.87 225.34 144.52
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BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES
(Unaudited)
Taxable Equivalent Basis (Dollars in thousands)
Three Months Ended March 31,
2009 2008
Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets:
Loans (1) $ 2,801,385 $ 38,344 5.55 % $ 2,493,224 $ 45,249 7.28 %
Securities - taxable 408,908 3,626 3.60 431,435 4,557 4.24
Securities - tax exempt 41,518 586 5.72 34,625 522 6.05
Interest Bearing Deposits with Banks
and Federal funds sold 270,854 359 0.54 415,731 3,183 3.07
Total earning assets 3,522,665 42,915 4.94 3,375,015 53,511 6.36
Nonearning assets:
Cash and due from banks 127,832 135,121
Interest receivable and other assets 233,479 217,117
Allowance for loan losses (34,550 ) (29,394 )
Total nonearning assets 326,761 322,844
Total assets $ 3,849,426 $ 3,697,859
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Transaction deposits $ 356,831 $ 226 0.26 % $ 410,017 $ 642 0.63 %
Savings deposits 1,102,520 4,599 1.69 1,095,980 7,910 2.89
Time deposits 849,815 5,555 2.65 824,832 8,623 4.19
Short-term borrowings 8,714 10 0.47 23,644 184 3.12
Long-term borrowings - - - 523 7 5.37
Junior subordinated debentures 26,804 491 7.43 26,539 491 7.42
Total interest-bearing liabilities 2,344,684 10,881 1.88 2,381,535 17,857 3.01
Interest-free funds:
Noninterest-bearing deposits 1,054,079 911,055
Interest payable and other
liabilities 32,860 25,456
Stockholders' equity 417,803 379,813
Total interest free funds 1,504,742 1,316,324
Total liabilities and stockholders'
equity $ 3,849,426 $ 3,697,859
Net interest income $ 32,034 $ 35,654
Net interest spread 3.06 % 3.35 %
Net interest margin 3.69 % 4.24 %
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(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.
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