Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s financial position and results of operations for the three years ended December 31, 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto and the selected consolidated financial data included herein.
FORWARD-LOOKING STATEMENTS
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. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
•
The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.
•
Changes in fiscal, monetary or regulatory policy may have adverse consequences including impacts to the labor market, tariffs and inflation which may impact our financial performance.
•
Changes in the regulatory environment for the banking industry, including rule-making, supervision, examination and enforcement.
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The increased time, effort and staffing needs related to ongoing and/or changed regulations from regulatory bodies could negatively impact noninterest expense.
•
Local, regional, national and international economic conditions, including the effect of a government shutdown, and the impact they may have on the Company and its customers.
•
Inflation, including wage inflation, energy prices, securities markets and monetary fluctuations.
•
Changes in oil and gas commodity prices and the potential impact to the related loan portfolio as well as the overall impact to the regional economic environment.
•
Changes in interest rates.
•
Potential impacts of adverse developments in the banking industry that could impact customer confidence.
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Further shift in deposit mix from noninterest-bearing deposits to interest-bearing deposits could negatively impact net interest margin.
•
Changes in the financial performance and/or condition of the Company’s borrowers, including the impact of higher interest rates.
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Changes in consumer spending, borrowing and savings habits.
•
Changes in the mix of loan sectors and types or the level of non-performing assets and charge-offs.
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•
Deterioration in the market for commercial office property could have an adverse effect on the value of the Company's other real estate owned as well as commercial office collateral for the Company's commercial real estate loans.
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Impairment of the Company’s goodwill or other intangible assets.
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Technological changes, fintech competition and disruption to the traditional banking systems, including emerging regulation around stablecoins, blockchain technology in payment networks and market acceptance of digital assets.
•
Cyber threats.
•
The Company’s success at managing the risks involved in the foregoing items.
Actual results may differ materially from forward-looking statements.
SUMMARY
The Company’s net income for 2025 was $240.6 million, or $7.11 per diluted share, compared to $216.4 million, or $6.44 per diluted share for 2024.
In 2025, net interest income increased to $490.5 million, compared to $446.9 million in 2024. Higher loan volume and growth in other earning assets were the primary drivers of the change in net interest income. The Company’s net interest margin increased to 3.74% for 2025 compared to 3.73% for 2024.
The Company recorded a provision for credit losses of $5.7 million in 2025 compared to $9.0 million in 2024. The Company's provision for credit losses decreased in 2025 primarily due to the lower loss rates experienced in more recent periods and the impact on the vintage loss analysis.
Noninterest income totaled $200.1 million in 2025 compared to $184.6 million in 2024. The increase in noninterest income was partially due to a gain on the sale of Visa B-1 stock of $4.5 million. In addition, trust revenue, treasury income, sweep fees and insurance commissions each increased during the year.
Noninterest expense was $379.8 million in 2025 compared to $347.2 million in 2024. Higher noninterest expenses in 2025 were primarily related to growth in salaries and employee benefits of $14.0 million related to annual merit increases and new hires. Also contributing to noninterest expense was an increase in net expense from other real estate owned of $7.4 million, which largely consisted of an increase in write-downs of other real estate of $4.1 million, other real estate expense of $1.8 million and a decrease in loss on sales of $1.5 million. Data processing expense increased $1.1 million in 2025 compared to 2024.
The Company’s assets at year-end 2025 totaled $14.8 billion, an increase of $1.3 billion from December 31, 2024. Loans grew $511.5 million from December 31, 2024, totaling $8.5 billion at December 31, 2025. Deposits totaled $12.7 billion at December 31, 2025 an increase of $951.8 million from December 31, 2024. Off-balance-sheet sweep accounts totaled $4.9 billion at December 31, 2025, down $262.6 million from December 31, 2024. The Company’s total stockholders’ equity totaled $1.9 billion at December 31, 2025.
Asset quality was strong through the year. Nonaccrual loans of $61.1 million representing 0.72% of total loans at December 31, 2025 relatively unchanged from $58.0 million or 0.72% of total loans at December 31, 2024. The allowance for credit losses to total loans was 1.22% at December 31, 2025, down slightly from 1.24% at December 31, 2024. Net charge-offs were $8.5 million for the year, compared to $6.3 million for the year ended December 31, 2024.
See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company’s significant accounting policies are described in Note (1) to the consolidated 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, which affect the amounts reported in the financial statements and the related disclosures. These estimates
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relate principally to the allowance for credit losses, income taxes, intangible assets and the fair value of financial instruments. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported. The following is a summary of the accounting policies and estimates that management believes are the most critical.
Allowance for Credit losses
The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the current expected credit loss ("CECL") model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.
The allowance for credit losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs. The amount of the allowance for credit losses is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.
To estimate expected losses using historical loss information, the Company elected to utilize a methodology known as vintage loss analysis. Vintage loss analysis measures impairment based on the age of the accounts and the historical performance of assets with similar risk characteristics. Vintage loss analysis determines expected losses by allowing the Company to calculate the cumulative loss rates of a given loan pool and, in so doing, determine the loan pool’s lifetime expected loss experience relative to the appropriate type of financial assets that share similar risk characteristics. Vintage loss analysis uses different “vintages” analyzed by year of origination through the weighted average maturity of each loan pool. The key quantitative inputs used in the Company’s estimate of the allowance for credit losses include 1) all available loan data tracked by year of origination, 2) total charge-offs for each specific loan pool recorded since year of origination, 3) recovery rate calculated by the average recovery over the previous seven years across all loan pools and 4) a weighting factor biased to more recent loss experience. The quantitative expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, as it references the specific vintage’s initial balance. The loss experience of this original balance is tracked annually and summed over the life of the loan for each separate loan pool, leaving a cumulative life of credit loss rate based on historic averages weighted towards more recent loss experience. These key quantitative inputs change from period to period as new loans are originated and charge-offs and recoveries are recognized. The recovery rate is revised on an annual basis, taking into consideration the most recent seven years. The weighting factor percentages remain static; however, the most recent year receives the highest weighting percentage.
The Senior Loan Committee (“the SLC”) approves qualitative adjustments for each loan pool. In approving the qualitative adjustments, they consider several factors, including external economic information, peer bank comparisons and experience with the loan portfolio, among others. The SLC also considers other current conditions adjustments and reasonable and supportable forecasts derived from third party information, primarily Moody’s Analytics economic scenarios. To determine the appropriateness of the economic scenarios, the Company uses judgment and statistical analysis which correlates charge-off history to the economic scenarios. The Company then forecasts future loss expectations based on the selected economic scenarios over the next 12 months, which is driven by management’s judgment of a reasonable and supportable forecast period, to arrive at an estimated qualitative adjustment attributable to economic forecasts. For periods beyond which the Company is able to make or obtain reasonable and supportable forecasts of expected credit losses, the Company reverts to historical loss information.
In some cases, management may determine a loan to be collateral dependent. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date and the repayment is expected to be provided substantially through the operation or sale of the collateral. For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure current expected credit losses on collateral-dependent financial assets. This amount is included in the allowance for credit losses.
Each quarter the SLC reviews the aggregate allowance. In addition, annually or more frequently as needed, the SLC evaluates the qualitative adjustments used in the allowance based on the information described above. To facilitate the SLC’s evaluation, the Asset Quality Department performs periodic reviews of business units and reports on the adequacy of management’s identification of collateral-dependent and adversely classified loans and their adherence to loan policies and procedures.
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The process of evaluating the appropriateness of the allowance for credit losses necessarily involves the exercise of judgment and consideration of numerous subjective factors and, accordingly, there can be no assurance that the estimate of expected losses will not change in light of future developments and economic conditions. Changes in assumptions and conditions could result in a materially different amount for the allowance for credit losses.
Income Taxes
The Company files a consolidated income tax return. Deferred taxes are recognized under the balance sheet method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized.
The amount of accrued current and deferred income taxes is based on estimates of taxes due or receivable from taxing authorities either currently or in the future. Changes in these accruals are reported as income tax expense or benefits, and involve estimates of the various components included in determining taxable income, tax credits, other taxes and temporary differences. Changes periodically occur in the estimates due to changes in tax rates, tax laws and regulations and implementation of new tax planning strategies. The process of determining the accruals for income taxes necessarily involves the exercise of considerable judgment and consideration of numerous subjective factors.
Management performs an analysis of the Company’s tax positions annually and believes it is more likely than not that all of its tax positions will be utilized in future years.
Intangible Assets and Goodwill
Core deposit intangibles are amortized on a straight-line basis over the estimated useful lives of seven to ten years and customer relationship intangibles are amortized on a straight-line basis over the estimated useful life of three to eighteen years. Goodwill is not amortized, but is evaluated at a reporting unit level at least annually for impairment or more frequently if other indicators of impairment are present. At least annually in the fourth quarter, intangible assets, are evaluated for possible impairment. Impairment losses are measured by comparing the fair values of the intangible assets with their recorded amounts. Any impairment losses are reported in the consolidated statements of comprehensive income.
The evaluation of remaining core deposit intangibles for possible impairment involves reassessing the useful lives and the recoverability of the intangible assets. The evaluation of the useful lives is performed by reviewing the levels of core deposits of the respective branches acquired. The actual life of a core deposit base may be longer than originally estimated due to more successful retention of customers, or may be shorter due to more rapid runoff. Amortization of core deposit intangibles would be adjusted, if necessary, to amortize the remaining net book values over the remaining lives of the core deposits. The evaluation for recoverability is only performed if events or changes in circumstances indicate that the carrying amount of the intangibles may not be recoverable.
The evaluation of goodwill for possible impairment is performed by comparing the fair values of the related reporting units with their carrying amounts including goodwill. The fair values of the related reporting units are estimated using market data for prices of recent acquisitions of banks and branches.
The evaluation of intangible assets and goodwill for the year ended December 31, 2025 and 2024 resulted in no impairments.
Fair Value of Financial Instruments
Debt securities that are being held for indefinite periods of time, or that may be sold as part of the Company’s asset/liability management strategy, to provide liquidity or for other reasons, are classified as available for sale and are stated at estimated fair value. Unrealized gains or losses on debt securities available for sale are reported as a component of stockholders’ equity, net of income tax.
The Company reviews its portfolio of debt securities in an unrealized loss position at least quarterly. The Company first assesses whether it intends to sell, or it is more-likely-than-not that it will be required to sell, the securities before recovery of the amortized cost basis. If either of these criteria is met, the security's amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, the Company considers, among other things, the performance of any underlying collateral and adverse conditions specifically related to the security. At December 31, 2025 97.2% of the available for sale debt securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies. The Company does not consider the unrealized position of these securities to be the result of credit factors, because the decline in fair value is attributable to changes in
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interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is unlikely that it will be required to sell the securities before their anticipated recovery. Therefore, the Company has not recorded an allowance for credit losses against its debt securities portfolio, as the credit risk is not material.
The estimates of fair values of debt securities and other financial instruments are based on a variety of factors. In some cases, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year-end or that will be realized in the future.
Future Application of Accounting Standards
See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements and their expected impact on the Company’s consolidated financial statements.
Segment Information
See Note (23) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s operating business segments.
RESULTS OF OPERATIONS
The following discussion and analysis presents the more significant factors that affected the Company's financial condition as of December 31, 2025 and 2024 and results of operations for each of the years then ended. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 28, 2025 (the “2024 Form 10-K”) for information about results of operations for 2024 compared with 2023, which the Company incorporates by reference.
This discussion and analysis should be read in conjunction with the Company's consolidated financial statements, notes thereto and other financial information appearing elsewhere in this report. From time to time, the Company has engaged in acquisitions. None of these acquisitions had a significant impact on the Company's consolidated financial statements. The Company accounts for acquisitions using the acquisition method, and as such, the results of operations of acquired companies are included from the date of acquisition forward.
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Average Balances, Income, Expenses and Rates
The following tables present certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were $20.9 million for the year ended December 31, 2025 compared to $20.8 million for the year ended December 31, 2024 and $21.9 million for the year ended December 31, 2023.
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
Taxable Equivalent Basis
(Dollars in thousands)
Interest Average Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
ASSETS
Earning assets:
Nonearning assets:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Long-term borrowings 2,458 44 1.79 — — — — — —
Interest-free funds:
Effect of interest free funds 1.20 % 1.44 % 1.37 %
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The following table depicts, for the periods indicated, selected income statement data and other selected data:
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
At and for the Year Ended December 31,
Income Statement Data
Per Common Share Data
Selected Financial Ratios
Performance ratios:
Net Interest Income
Net interest income, which is the Company’s principal source of operating revenue, increased $43.6 million in 2025. The primary driver of the increase in net interest income was higher loan volume and growth in other earning assets.
Changes in the volume of earning assets and interest-bearing liabilities and changes in interest rates, determine the changes in net interest income. The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income in 2025 and 2024. See “Maturity and Rate Sensitivity of Loans” for additional discussion.
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VOLUME/RATE ANALYSIS
Taxable Equivalent Basis
Total Due toVolume(1) Due toRate Total Due toVolume(1) Due toRate
(Dollars in thousands)
INCREASE (DECREASE)
Interest Income:
Interest Expense:
Long-term borrowings 44 44 — — — —
Subordinated debt (1 ) (10 ) 9 1 3 (2 )
Provision for Credit Losses
The Company's provision for credit losses decreased in 2025 primarily due to the lower loss rates observed in more recent periods and the impact on the vintage loss analysis. The Company establishes an allowance as an estimate of the current expected credit losses in the loan portfolio at the balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change which could affect the amount of future provisions for credit losses.
Net loan charge-offs were $8.5 million for 2025 compared to $6.3 million for 2024. The net charge-offs equated to 0.10% and 0.08% of average loans for 2025 and 2024, respectively. The rate of net charge-offs to average total loans continues to be at a low level. A more detailed discussion of the allowance for credit losses is provided under “Loans.”
Noninterest Income
Total noninterest income increased by $15.6 million, or 8.4% for 2025 compared to 2024. The increase in noninterest income was partially due to a gain on the sale of Visa B-1 stock of $4.5 million. Other drivers of the increase in noninterest income include increased income from sweep fees of $3.5 million along with increases in trust revenue of $1.3 million, treasury income of $1.4 million, insurance commissions of $1.5 million, service charges on deposits of $1.5 million and gain on sale of other assets of $1.0 million.
The Company’s operating noninterest income has generally increased over time due to enhanced product lines, acquisitions and internal deposit account growth.
The Company earned $3.2 million on the sale of loans in 2025 compared to $2.7 million in 2024.
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Noninterest income included NSF and overdraft fees totaling $31.6 million and $31.1 million in 2025 and 2024, respectively. This represents 15.8% and 16.8% of the Company’s noninterest income for the years 2025 and 2024, respectively. In addition, the Company had debit card usage and interchange fees totaling $27.2 million and $26.8 million for the years 2025 and 2024, respectively. This represents 13.6% and 14.5% of the Company’s noninterest income for the years 2025 and 2024, respectively.
Noninterest Expense
Total noninterest expense increased by $32.7 million, or 9.4% for 2025 compared to 2024. Higher noninterest expenses in 2025 were primarily related to growth in salaries and employee benefits of $14.0 million related to annual merit increases and new hires. In addition, net expense from other real estate owned increased $7.4 million, which largely consisted of an increase in write-downs of other real estate of $4.1 million, other real estate expense of $1.8 million and was partially offset by a decrease in loss on sales of $1.5 million. Data processing expense increased $1.1 million in 2025 compared to 2024. Occupancy expense increased $3.0 million, due largely to repairs and maintenance. In addition, included in other, the Company recorded an expense related to the disposition of certain equity investments no longer permissible under the Volcker Rule, which prohibits banks with more than $10 billion in assets from holding certain private equity investments.
Noninterest expense included deposit insurance expense, which totaled $6.8 million for the year ended December 31, 2025, compared to $6.4 million for the year ended December 31, 2024.
Income Taxes
Income tax expense totaled $64.5 million in 2025, compared to $58.9 million in 2024. The effective tax rates for 2025 and 2024 were 21.1% and 21.4% respectively.
The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.
Certain financial information is prepared on a taxable equivalent basis to facilitate analysis of yields and changes in components of earnings. Average balance sheets, comprehensive income statements and other financial statistics are also presented on a taxable equivalent basis.
Impact of Inflation
The impact of inflation on financial institutions differs significantly from that of industrial or commercial companies. The assets of financial institutions are predominantly monetary, as opposed to fixed or nonmonetary assets such as premises, equipment and inventory. As a result, there is little exposure to inflated earnings by understated depreciation charges or significantly understated current values of assets. Although inflation can have an indirect effect by leading to higher interest rates, financial institutions are in a position to monitor the effects on interest costs and yields and respond to inflationary trends through management of interest rate sensitivity. Inflation can also have an impact on noninterest expenses such as salaries and employee benefits, occupancy, services and other costs.
Impact of Deflation
In a period of deflation, it would be reasonable to expect widely decreasing prices for real assets. In such an economic environment, assets of businesses and individuals, such as real estate, commodities or inventory, could decline. The inability of customers to repay or refinance their loans could result in credit losses incurred by the Company far in excess of historical experience due to deflated collateral values.
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FINANCIAL POSITION
BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)
At and for the Year Ended December 31,
Balance Sheet Data
Tangible book value per share (non-GAAP)(1) 49.20 42.92
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)
Tangible book value per share (non-GAAP) $ 49.20 $ 42.92
Selected Financial Ratios
Balance Sheet Ratios:
Average loans to deposits 67.22 % 71.50 %
Average earning assets to total assets 93.02 92.91
Average stockholders’ equity to average assets 12.22 11.78
Asset Quality Ratios:
Nonaccrual loans to total loans 0.72 % 0.72 %
Allowance for credit losses to total loans 1.22 1.24
Allowance for credit losses to nonaccrual loans 170.62 171.59
Net charge-offs to average loans 0.10 0.08
Cash, Federal Funds Sold and Interest-Bearing Deposits with Banks
Cash consists of cash and cash items on hand, noninterest-bearing deposits and amounts due from other banks, reserves deposited with the Federal Reserve Bank, and interest-bearing deposits with other banks. Federal funds sold consist of overnight investments of excess funds with other financial institutions. The Company has continued to maintain the majority of 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, which decreased during the last four months of 2025 from 4.40% to 3.65%. The rate decreased from 5.40% to 4.40% during the last four months of 2024.
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The amount of cash, federal funds sold and interest-bearing deposits with the Federal Reserve Bank carried by the Company is a function of the availability of funds presented to other institutions for clearing and the Company’s liquidity and interest rate sensitivity management. Balances of these items can fluctuate widely based on these various factors. The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increased by $941.6 million, or 26.5%, to $4.5 billion, from December 31, 2024 to December 31, 2025. The increase was related to an increase of interest-bearing deposits in addition to maturing securities.
Securities
For the year ended December 31, 2025, total debt securities decreased $286.8 million. Debt securities available for sale represented 99.9% of the total debt securities portfolio at both December 31, 2025 and December 31, 2024. Debt securities available for sale had a net unrealized loss, before taxes, of $10.8 million at December 31, 2025, compared to $43.1 million at December 31, 2024. These unrealized losses, net of income taxes, of $8.3 million at December 31, 2025 and $32.9 million at December 31, 2024 are included in the Company’s stockholders’ equity as accumulated other comprehensive loss. The Company did not recognize a gain or loss on debt securities during the years ended December 31, 2025 or 2024. The Company purchased a total of $371.3 million of debt securities in 2025 compared to $375.4 million of debt securities in 2024. In addition, the Company had maturities and paydowns of debt securities totaling $709.2 million in 2025 and $742.3 million in 2024.
The Company does not engage in securities trading activities. Any sales of debt securities are for the purpose of executing the Company’s asset/liability management strategy, eliminating a perceived credit risk in a specific security, or providing liquidity. Debt securities that are being held for indefinite periods of time, or that may be sold as part of the Company’s asset/liability management strategy, to provide liquidity, or for other reasons, are classified as available for sale and are stated at estimated fair value. Unrealized gains or losses on debt securities available for sale are reported as a component of stockholders’ equity, net of income tax. Debt securities for which the Company has the intent and ability to hold to maturity are classified as held for investment and are stated at cost, adjusted for amortization of premiums and accretion of discounts computed under the interest method.
Management has the ability and intent to hold the debt securities classified as held for investment until they mature, at which time the Company will receive full value for the securities. Furthermore, the Company also has the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost. As of December 31, 2025, the Company had net unrealized losses largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value of those securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for similar investments decrease. Furthermore, as of December 31, 2025, management had no intent or requirement to sell before the recovery of the unrealized loss.
See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities.
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WEIGHTED AVERAGE YIELD OF DEBT SECURITIES
The following table summarizes the maturity distribution schedule with corresponding weighted average taxable equivalent yields of the debt securities portfolio at December 31, 2025. The following table presents securities at their expected maturities, which may differ from contractual maturities. The Company manages its debt securities portfolio for liquidity, as a tool to execute its asset/liability management strategy, and for pledging requirements for public funds. For the interest rate sensitivity of debt securities see the table in item 7A.
Amount Yield* Amount Yield* Amount Yield* Amount Yield* Amount Yield*
(Dollars in thousands)
Held for Investment
Mortgage-backed securities $ — — % $ 1 4.96 % $ — — % $ — — % $ 1 4.96 %
State and political subdivisions 60 2.63 — — — — — — 60 2.63
Percentage of total 99.9 % 0.1 % — % — % 100.0 %
Available for Sale
* Yield is on a taxable-equivalent basis using a 21% tax rate.
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Loans
The Company has historically generated loan growth from both internal originations and bank acquisitions. Total loans held for investment increased $507.7 million, or 6.3% in 2025, as a result of internal loan growth and its acquisition of ABOK. The acquisition of ABOK added $243.1 million of the increase in loans held for investment. In addition, of the total increase in loans, commercial real estate loans made up the largest increase with $242.0 million, or 47.7%, residential real estate loans increased $204.8 million, or 40.3% and consumer non-real estate loans increased $54.8 million, or 10.8%. Construction and development loans decreased $99.4 million, or 19.6% in 2025. The preponderance of internal loan growth was from the Company's Oklahoma subsidiary BancFirst.
Composition
The Company’s loan portfolio was diversified among various types of commercial and individual borrowers. Commercial loans were comprised principally of loans to companies in real estate, light manufacturing, retail and service industries. Consumer non-real estate loans were comprised primarily of loans to individuals for automobiles.
LOANS HELD FOR INVESTMENT BY CATEGORY
December 31,
Amount % ofTotal Amount % ofTotal
(Dollars in thousands)
See Note (1) and Note (5) of the Notes to Consolidated Financial Statements for additional disclosures regarding the Company’s loans.
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LOANS BY MATURITY AND INTEREST RATE SENSITIVITY
The information relating to the maturity and interest rate sensitivity of loans is based upon contractual maturities and original loan terms. In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, at interest rates prevailing at the date of renewal.
The following table presents the maturity distribution of loans held for investment at December 31, 2025. Many of the loans with maturities of one year or less are renewed at existing or similar terms after scheduled principal reductions. Also, approximately 64% of loans had adjustable interest rates at December 31, 2025.
Loans Maturing
December 31, 2025 (Dollars in thousands)
The interest rate composition of loans with a maturity date over one year are presented below based on contractual terms.
Loans Maturing after One Year
Predetermined (Fixed) Interest Rate Floating Interest Rate Total
December 31, 2025 (Dollars in thousands)
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NONPERFORMING ASSETS
The following table summarizes nonperforming assets.
December 31,
(Dollars in thousands)
Past due 90 days or more and still accruing $ 8,115 $ 7,739
Other real estate owned and repossessed assets 49,134 33,665
Nonaccrual Loans
Nonaccrual loans increased $3.1 million during 2025. Although nonaccrual loans increased during 2025, they represent only 0.72% of loans at December 31, 2025. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $4.9 million for 2025 and $3.5 million for 2024. Only a small amount of this interest is expected to be ultimately collected.
The classification of a loan as nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although, in an economic downturn, the Company’s experience has been that the level of collections decline. The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses. The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions. At December 31, 2025, the allowance for credit losses as a percentage of nonaccrual loans was 170.6%, compared to 171.6%, at the end of 2024.
Modified Loans
The Company evaluates, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the year ended December 31, 2025 was approximately $6.4 million. The recorded balance of loans modified during the year ended December 31, 2024 was approximately $14.8 million.
Other Real Estate Owned and Repossessed Assets
Other real estate owned ("OREO") and repossessed assets increased $15.5 million in 2025. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. The Company's write-downs in OREO totaled $8.2 million for 2025 and $4.0 million for 2024.
During the twelve months ended December 31, 2025, the Company foreclosed on a construction and development real estate loan and recorded $15.6 million in OREO, which was the primary reason for the increase in OREO. In addition, as of both December 31, 2025 and December 31, 2024, OREO included a commercial real estate property recorded at approximately $24.7 million and $28.1 million, respectively. The decrease for this commercial real estate property was due to write downs during the year ended December 31, 2025.
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Rental income for OREO properties is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for OREO properties is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income.
The Company's total rental income and operating expenses from OREO are presented in the following table:
For the Year Ended December 31,
(Dollars in thousands)
Allowance for Credit Losses/Fair Value Adjustments on Acquired Loans
The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. At December 31, 2025, the allowance for credit losses to total loans stood at 1.22% of total loans, compared to 1.24% at December 31, 2024.
The overall credit quality of the Company’s loan portfolio has remained strong. Net charge-offs were $8.5 million and $6.3 million for the years ended 2025 and 2024, respectively. The amount of net loan charge-offs is relatively low, equating to 0.10% and 0.08% of average total loans for the years ended December 31, 2025 and 2024, respectively. If unforeseen adverse changes occur in the national or local economy, or in the credit markets, it would be reasonable to expect that the allowance for credit losses would increase in future periods.
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES
The following table is a break-out of the allowance for credit losses:
Year Ended December 31,
(Dollars in thousands)
Commercial real estate owner occupied $ 6,937 $ 6,869
Commercial real estate non-owner occupied 33,266 33,097
Construction and development < 60 months 4,682 8,671
Construction residential real estate < 60 months 2,868 2,336
Residential real estate first lien 7,499 4,568
Residential real estate all other 1,775 1,741
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The following table is a break-out of net charge-offs/(recoveries) and the break-out of the percent of average loans in each category:
December 31,
Amount % ofAvg Loans Amount % ofAvg Loans
(Dollars in thousands)
Commercial real estate owner occupied $ 102 0.00 % $ (70 ) 0.00 %
Commercial real estate non-owner occupied 1,471 0.02 142 —
Construction and development < 60 months 3,963 0.05 — —
Construction residential real estate < 60 months 26 — 3 —
Residential real estate first lien 120 — 229 0.01
Residential real estate all other 124 — 159 —
Oil and gas — — 92 —
Fair Value Adjustments on Acquired Loans
The fair value adjustment on acquired loans can consist of a credit component and a rate component to adjust for estimated credit exposures in the acquired loans. The credit component of the adjustment was a $841,000 discount at December 31, 2025 and a $1.1 million discount at December 31, 2024. The rate component was $417,000 at December 31, 2025 and $472,000 at December 31, 2024. These fair value adjustments will be accreted to income over the remaining life of the loans. The acquired loans outstanding were $504.0 million and $262.2 million, at December 31, 2025 and 2024, respectively.
Intangible Assets, Goodwill and Other Assets
Identifiable intangible assets and goodwill totaled $204.1 million and $195.4 million at December 31, 2025 and December 31, 2024. On November 17, 2025, the Company acquired American Bank of Oklahoma and recorded a core deposit intangible of approximately $11.6 million and goodwill of approximately $476,000. See Note (7) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s intangible assets and goodwill.
See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.
Other assets include the cash surrender value of key-man life insurance policies totaling $94.2 million at December 31, 2025 and $84.4 million at December 31, 2024.
Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $21.2 million at December 31, 2025 and $10.5 million at December 31, 2024. They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity. The Company had a margin liability included in other liabilities in the amount of $7.4 million at December 31, 2025. The Company had a margin asset included in other assets in the amount of $463,000 at December 31, 2024. See Note (22) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.
Equity securities are reported in other assets on the balance sheet. The Company invests in equity securities without readily determinable fair values. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $9.3 million at December 31, 2025 and $13.4 million at December 31, 2024. The decrease in equity securities was due to a disposition of certain equity investments
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no longer permissible under the Volcker Rule, which prohibits banks with more than $10 billion in assets from holding certain private equity investments. The Company reviews its portfolio of equity securities for impairment at least quarterly.
Low-Income Housing Tax Credit Investments
The Company invests in affordable housing projects that qualify for the low-income housing tax credit (LIHTC), which is designed to promote private development of low-income housing. The Company’s LIHTC investments were $94.9 million and $58.6 million at December 31, 2025 and 2024, respectively and are included in other assets on the consolidated balance sheet. Unfunded commitments to these investments as of December 31, 2025 totaled $63.5 million.
New Market Tax Credit Investments
The Company invests in active low-income community businesses that qualify for New Market Tax Credits. New Market Tax Credit investments are made through Community Development Entities and such entities are qualified through the US Department of the Treasury. The Company’s NMTC investments were $8.9 million and $7.5 million at December 31, 2025 and 2024, respectively and are included in other assets on the consolidated balance sheet. There are no unfunded commitments.
Historic Tax Credit Investments
The Company invests in rehabilitation projects that qualify for Historic Tax Credits. Total Historic Tax Credit investments were $8.6 million and $6.3 million at December 31, 2025 and 2024, respectively, and are included in other assets on the consolidated balance sheet. Unfunded commitments to these investments as of December 31, 2025 totaled $2.6 million.
See Note (6) of the Notes to Consolidated Financial Statements for disclosures regarding these investments.
Liquidity and Funding
The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. The Company is highly liquid, with percent of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets of 30.3% at December 31, 2025, compared to 26.2% at December 31, 2024. The increase was related to an increase in interest-bearing deposits in addition to maturing securities.
Historically, BancFirst has more liquidity than its peers. This liquidity positions BancFirst to respond to increased loan demand and other requirements for funds, or to decreases in funding sources. The liquidity of BancFirst Corporation, however, is dependent upon dividend payments from BancFirst and its ability to obtain financing and or raise capital. Banking regulations limit bank dividends based upon net earnings retained by BancFirst and minimum capital requirements. Dividends in excess of these limits require regulatory approval. At January 1, 2026, BancFirst had approximately $204.9 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2025, BancFirst declared four common stock dividends totaling $75.8 million and two preferred stock dividends totaling $1.9 million to BancFirst Corporation. During 2025, Pegasus declared special dividends totaling $7.4 million to BancFirst Corporation.
Deposits
At December 31, 2025, deposits totaled $12.7 billion, an increase of $951.8 million from December 31, 2024. The increase was primarily related to organic growth in interest-bearing deposits as well as its acquisition of ABOK, which added $329.5 million at December 31, 2025. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits was 94.8% at December 31, 2025 and 95.5% December 31, 2024. Noninterest-bearing deposits to total deposits were 30.8% at December 31, 2025, compared to 33.3% at December 31, 2024.
Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit
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insurance regimes. Total uninsured deposits were $4.3 billion and $4.0 billion at December 31, 2025 and 2024, respectively, as calculated per regulatory guidance. This was approximately 34% of deposits at both December 31, 2025 and 2024.
Off-balance-sheet sweep accounts totaled $4.9 billion at December 31, 2025, compared to $5.2 billion at December 31, 2024. The movement of customers' funds into the Company's off-balance-sheet sweep accounts affected the balances of both cash and deposits.
ANALYSIS OF AVERAGE DEPOSITS
The following table sets forth average deposits and rates paid by category:
Year Ended December 31,
(Dollars in thousands)
Average Balance Average Rate Average Balance Average Rate
Average Balances
MATURITY OF TIME DEPOSITS
The following table shows the maturity of time deposits that are in excess of the Federal Deposit Insurance Corporation's insurance limit:
(Dollars in thousands)
Over three months through six months 69,681
Over six months through twelve months 79,403
At December 31, 2025, 86.6% of the Company’s uninsured time deposits mature in one year or less.
Short-Term Borrowings
See Note (9) of the Notes to Consolidated Financial Statements for a discussion of short-term borrowings.
Lines of Credit
See Note (10) of the Notes to Consolidated Financial Statements for a discussion of the Company’s lines of credit.
Subordinated Debt
See Note (11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.
Capital Resources
Stockholders’ equity totaled $1.9 billion at December 31, 2025, compared to $1.6 billion at December 31, 2024. In addition to net income of $240.6 million, other changes in stockholders’ equity during the year ended December 31, 2025 included $4.7 million in common stock issuances related to stock-based compensation plans, $22.7 million in common stock issuances related to the acquisition of ABOK, $3.7 million related to stock-based compensation arrangements, and a $24.6 million increase in other comprehensive income,
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that were partially offset by $63.4 million in dividends. The Company’s average stockholders’ equity to average assets for 2025 was 12.22% compared to 11.78% for 2024. The Company’s leverage ratio and total risk-based capital ratios at December 31, 2025 were well in excess of the regulatory requirements. Banking institutions are generally expected to maintain capital well above the minimum levels. The Company’s trust preferred securities qualify as Tier 1 capital and its Subordinated Notes qualify as Tier 2 capital under bank regulatory guidelines.
See Note (15) of the Notes to Consolidated Financial Statements for a discussion of capital ratio requirements.
See Note (11) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Subordinated Debt.
On August 5, 2025, the Company filed with the Securities and Exchange Commission (“SEC”) an automatic shelf registration statement on Form S-3, which became effective upon filing with the SEC. Under the shelf registration, the Company may offer and sell, from time to time, an indeterminate amount of its common stock in one or more future offerings.
The Company has adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity. In addition, the SRP may be used to purchase treasury stock for the issuance of stock related to stock-based compensation plans, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP is determined by management and approved by the Company’s Executive Committee. At December 31, 2025, up to 479,784 shares could be repurchased under the SRP. No shares were repurchased for the year ended December 31, 2025 or 2024.
Future dividend payments will be determined by the Company’s Board of Directors considering the earnings, financial condition and capital needs of the Company, BancFirst, Pegasus, Worthington, ABOK, applicable governmental policies and regulations and such other factors as the Board of Directors deems appropriate. While no assurance can be given as to the Company’s ability to pay dividends, management believes that, based upon the anticipated performance of the Company, regular dividend payments will continue in 2026.
Related Party Transactions
See Note (18) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s related party transactions.
Liquidity Risk and Off-Balance Sheet Arrangements
Liquidity is the ability to meet financial obligations through the maturity or sale of existing assets or the acquisition of additional funds. Various financial obligations, including contractual obligations and commercial commitments, may require future cash payments by the Company. Certain obligations are recognized on the Consolidated Balance Sheets, while others are off-balance sheet under U.S. generally accepted accounting principles. The Company currently has 7.20% Junior Subordinated Debentures, Subordinated Notes, operating and financing lease payments, time deposit payments, low-income housing partnership commitments and historic tax credit commitments. The Company’s 7.20% Junior Subordinated Debentures mature on March 31, 2034. The Company's Subordinated Notes mature on June 30, 2036. The Company has consistently generated positive net income and the Company currently expects to have positive net income for 2026. Management does not currently know of any trends that would cause the Company to be unable to provide for current obligations in the next twelve months.
Refer to Notes 6, 8, 11, 19 and 20 to the consolidated financial statements for further information regarding these contractual obligations.
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit, which involve elements of credit and interest-rate risk to varying degrees. The Company’s exposure to credit loss in the event of nonperformance by the other party to the instrument is represented by the instrument’s contractual amount. To control this credit risk, the Company uses the same underwriting standards as it uses for loans recorded on the consolidated balance sheet. The Company had $2.4 billion and $2.5 billion in loan commitments at December 31, 2025 and 2024, respectively. The Company had $87.8 million and $102.6 million in stand-by letters of credit at December 31, 2025 and 2024, respectively. Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments generally have fixed expiration dates or other termination
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clauses. Since many of the instruments are expected to expire without being drawn upon, the total amounts do not necessarily represent commitments that will be funded in the future.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Market risk refers to the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates, commodity prices and other relevant market rates and prices, such as equity prices. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. Due to the nature of its operations, the Company is primarily exposed to interest rate risk arising principally from its lending, investing, deposit and borrowing activities and, to a lesser extent, liquidity risk.
Interest rate risk on the Company’s consolidated balance sheet consists of repricing, option and basis risks. Repricing risk results from the differences in the maturity or repricing of asset and liability portfolios. Option risk arises from “embedded options” present in many financial instruments such as loan prepayment options, deposit early withdrawal options and interest rate options. These options allow customers opportunities to benefit when market interest rates change, which typically results in higher costs or lower revenue for the Company. Basis risk refers to the potential for changes in the underlying relationship between market rates and indices, which subsequently result in a narrowing of the profit spread on an earning asset or liability. Basis risk is also present in administered rate liabilities, such as savings accounts, negotiable order of withdrawal accounts and money market accounts where historical pricing relationships to market rates may change due to the level or directional change in market interest rates.
The Company seeks to reduce volatility in its net interest margin and net interest income through periods of changing interest rates. Accordingly, the Company’s interest rate sensitivity and liquidity are monitored on an ongoing basis by its Asset and Liability Committee (“ALCO”). The ALCO establishes risk measures, limits and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. A variety of tools are used to evaluate the magnitude of interest rate risk, the distribution of risk, the level of risk over time and the exposure to changes in certain interest rate relationships. The ALCO also utilizes an earnings simulation model as a quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income over the next twelve months. These simulations incorporate assumptions regarding changes in interest rates and the maturity and repricing of earning assets and interest-bearing liabilities. The ALCO uses gap analysis to monitor interest rate sensitivity based on the maturity and repricing frequencies of its earning assets and interest-bearing liabilities.
The ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities. As of December 31, 2025, the model simulations projected that a 100 and 200 basis point increase would result in positive variance in net interest income of 4.93% and 10.06%, respectively, relative to the base case over the next twelve months. Conversely, the model simulation projected that a decrease in interest rates of 100 basis points would result in a negative variance in net interest income of 7.24% relative to the base case over the next twelve months.
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The following table presents the Company’s financial instruments that are sensitive to changes in interest rates, their expected maturities and their estimated fair values at December 31, 2025.
Avg. Expected Maturity / Principal Repayments at December 31,
(Dollars in thousands)
Interest Sensitive Assets
Interest Sensitive Liabilities
Off-Balance Sheet Items
Loan commitments — — — — — — — 4,188
Letters of credit — — — — — — — 659
The expected maturities and principal repayments are based upon the contractual terms of the instruments. Debt securities are stated at par value. Prepayments have been estimated for certain instruments with predictable prepayment rates. Savings and interest-bearing demand deposits are assumed to mature all in the first year as they are not subject to withdrawal restrictions and any assumptions regarding decay rates would be very subjective. The actual maturities and principal repayments for the financial instruments could vary substantially from the contractual terms and assumptions used in the analysis.
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Item 8. Financial Statements and Supplementary Data.
Report of Independent Registered Public Accounting Firm
Shareholders, Board of Directors, and Audit Committee
BancFirst Corporation
Oklahoma City, Oklahoma
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of BancFirst Corporation (the “Company”) as of December 31, 2025 and 2024 the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses on Loans – Qualitative Adjustment
Description of the Matter
The Company’s loan portfolio totaled $8.5 billion and the allowance for credit losses on loans was $104.3 million as of December 31, 2025, respectively. As more fully described in Notes 1 and 5 to the financial statements, the allowance for credit losses – loans (ACL) estimate lifetime expected credit losses for loans. The estimate of ACL considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company measures expected credit losses of loans on a pool basis
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when the loans share similar characteristics. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation.
Historical loss rates are analyzed and applied to their respective loan segments comprised of loans not subject to individual evaluation. The Company utilizes a methodology known as vintage loss analysis for substantially all its loan portfolio. Vintage loss analysis measures impairment based on the age of the accounts and the historical asset performance of assets with similar risk characteristics. Vintage loss analysis determines expected losses by calculating the cumulative loss rates of a given loan pool over the expected pool’s life. Historical loss rates are qualitatively adjusted for significant factors that, in management’s judgment, reflect the impact of current conditions on loss recognition. These adjustments are based on information obtained from external sources and consideration of other internal information. They are included in the ACL model for a reasonable and supportable forecast period, with loss factors reverting to historical loss rates. Management continually re-evaluates the other subjective and forecast factors in its ACL analysis.
How the Critical Audit Matter was Addressed in the Audit
We identified the allowance for credit losses, and more specifically the qualitative factor applied in the allowance, as a critical audit matter. The principal consideration for our determination of the qualitative factor adjustments as a critical audit matter is the high degree of judgment and subjectivity relating to management’s identification and measurement of the qualitative factor. Therefore, applying audit procedures required a higher degree of auditor judgment and subjectivity due to the nature and extent of audit evidence and effort required to address this matter.
The primary procedures we performed related to this critical audit matter included:
•
Obtained an understanding of the Company’s process for establishing the qualitative adjustment.
•
Evaluated and tested the design and operating effectiveness of controls over (1) the establishment of qualitative factors, (2) completeness and accuracy of key inputs and assumptions used in the model, and (3) the governance of the credit loss methodology, including the review and approval of the qualitative reserve.
•
Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the reasonableness of the significant assumptions.
/s/ Forvis Mazars, LLP
We have served as the Company’s auditor since 2013.
Oklahoma City, Oklahoma
February 26, 2026
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BANCFIRST CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31,
ASSETS
Debt securities available for sale at fair value 924,387 1,210,917
Loans held for investment (net of unearned interest) 8,532,853 8,025,110
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Short-term borrowings 10,010 —
Long-term borrowings 12,000 —
Accrued interest payable and other liabilities 206,151 128,424
Commitments and contingent liabilities (Note 19)
Stockholders' equity:
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued — —
The accompanying Notes are an integral part of these consolidated financial statements.
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BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share data)
Year Ended December 31,
INTEREST INCOME
Securities:
INTEREST EXPENSE
Long-term borrowings 44 — —
Provision for off-balance sheet credit exposures 723 — —
NONINTEREST INCOME
Gain/(loss) on sale of other assets 955 (12 ) 1,603
NONINTEREST EXPENSE
NET INCOME PER COMMON SHARE
OTHER COMPREHENSIVE INCOME:
The accompanying Notes are an integral part of these consolidated financial statements.
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BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands, except share data)
Year Ended December 31,
Shares Amount Shares Amount Shares Amount
COMMON STOCK
Shares issued for acquisition 204,235 204 — — — —
Shares acquired and canceled — — — — (20,702 ) (21 )
CAPITAL SURPLUS
Common stock issued for stock-based compensation plans 4,563 8,915 2,465
Common stock issued for acquisition 22,492 — —
RETAINED EARNINGS
Common stock acquired and canceled — — (1,799 )
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains/(losses) on available for sale debt securities:
The accompanying Notes are an integral part of these consolidated financial statements.
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BANCFIRST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in thousands)
December 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile to net cash provided by operating activities:
Net amortization of securities premiums and discounts (722 ) (1,052 ) (1,269 )
Realized securities (gains)/losses (383 ) (97 ) 1,828
Decrease (increase) in interest receivable 2,004 (636 ) (9,876 )
Amortization of stock-based compensation arrangements 3,726 3,452 2,999
INVESTING ACTIVITIES
Net cash received from acquisitions, net of cash paid 13,724 — 8,045
Purchase of equity securities (371 ) (409 ) (310 )
Proceeds from paydowns and sales of equity securities 5,179 405 850
Net receipts (payments) on derivative asset contracts 7,956 (15,356 ) 21,192
FINANCING ACTIVITIES
Paydown of long-term borrowings (14,000 ) — —
Common stock acquired — — (1,820 )
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Noncash investing and financing activities:
The accompanying Notes are an integral part of these consolidated financial statements.
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BANCFIRST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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 States of America (U.S. GAAP) and general practice within the banking industry. A summary of the significant accounting policies follows.
Nature of Operations
BancFirst Corporation is an Oklahoma business corporation and a financial holding company under federal law. It conducts virtually all of its operating activities through its principal wholly-owned subsidiary, BancFirst (“BancFirst”), an Oklahoma state-chartered bank headquartered in Oklahoma City, Oklahoma. The Company also conducts operating activities through its wholly-owned subsidiaries, Pegasus Bank (“Pegasus”), a Texas state-chartered bank headquartered in Dallas, Texas, Worthington Bank ("Worthington"), a Texas state-chartered bank headquartered in Arlington, Texas and American Bank of Oklahoma ("ABOK"), a community bank headquartered in Collinsville, Oklahoma. BancFirst, Pegasus, Worthington and ABOK provide a wide range of retail and commercial banking services, including: commercial, real estate, agricultural and consumer lending; depository and funds transfer services; collections; safe deposit boxes; cash management services; and other services tailored for both individual and corporate customers. BancFirst also offers trust services and acts as executor, administrator, trustee, transfer agent and in various other fiduciary capacities. BancFirst provides item processing, research and other correspondent banking services to financial institutions and governmental units. The Company’s wholly-owned subsidiary, BancFirst Insurance Services, Inc., an independent insurance agency, offers a variety of commercial and personal insurance products. In addition, the Company’s wholly-owned subsidiary, Council Oak Partners, LLC, an Oklahoma limited liability company, engages in investing activities.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BFC-PNC LLC, Calimesa Town Center, LLC, BancFirst Insurance Services, Inc., Pegasus, Worthington, ABOK and BancFirst and its subsidiaries. The principal operating subsidiary of BancFirst is BFTower, LLC. 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 consolidated financial statements.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. GAAP 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 credit losses, income taxes, the fair value of financial instruments and the valuation of assets and liabilities acquired in a business combination, including identifiable intangible assets. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.
Securities
The Company invests in debt securities. Any sales of debt securities are for the purpose of executing the Company’s asset/liability management strategy, eliminating a perceived credit risk in a specific security or providing liquidity. Debt securities that are being held for indefinite periods of time, or that may be sold as part of the Company’s asset/liability management strategy, to provide liquidity or for other reasons, are classified as available for sale and are stated at estimated fair value. Unrealized gains or losses on debt securities available for sale are reported as a component of stockholders’ equity, net of income tax. Gains or losses from sales of debt securities are based upon the book values of the specific debt securities sold. Debt securities for which the Company has the intent and ability to hold to maturity are classified as held for investment and are stated at cost, adjusted for amortization of premiums and accretion of discounts computed under the interest method. The Company reviews its portfolio of debt securities in an unrealized loss position at least quarterly. The Company first assesses whether it intends to sell or it is more-likely-than-not that it will be required to sell the securities before recovery of the amortized cost basis. If either of these criteria is met, the security's amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, the Company considers, among other things, the performance of any underlying collateral and adverse conditions specifically related to the security. The Company does not consider the unrealized position of its debt securities to be the result of credit factors, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. The
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Company does not have the intent to sell these securities and it is unlikely that it will be required to sell the securities before their anticipated recovery. Therefore, the Company has not recorded an allowance for credit losses against its debt securities portfolio, as the credit risk is not material. The Company does not engage in securities trading activities.
The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. These securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. Equity securities are reported in other assets on the consolidated balance sheet. The Company reviews its portfolio of equity securities for impairment at least quarterly.
Loans
The lending function is governed by written policies and procedures, as determined by senior management and approved by the Board of Directors. The policies and procedures set the standards for lending in each major loan category by collateral type and use of loan proceeds. The objectives of these policies and procedures are to identify profitable markets, determine appropriate risk tolerance levels for each type of loan, establish limits for loan officer approval, set concentration limits, establish loan-to-value thresholds, set repayment terms and loan structure guidelines and to adhere to documentation requirements. Interest rate risk is controlled by the use of variable rate provisions, the vast majority of which have a rate floor, limits on fixing rates for longer periods and the use of prepayment penalties.
Loans originated within the Company are stated at the principal amount outstanding, net of unearned interest, loan fees and allowance for credit losses. Interest on all performing loans is recognized, on a simple interest basis, based upon the principal amount outstanding. See Note (5) for loan disclosures.
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts. The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses because it writes off uncollectible accrued interest in a timely manner. Interest income is accrued on the unpaid principal balance using the simple-interest method on the daily balances of the principal amounts outstanding.
The Company writes off accrued interest once a loan enters non-accrual status. The Company debits interest income for the interest accrued. No interest will be accrued on loans for which a default of principal or interest has existed for a period of at least 90 days unless the collateral margin or guarantor support are such that full collection of principal and interest are not in doubt and an orderly plan for collection is in process. The Company also suspends interest recognition on any other loan for which it is more likely than not that future contractual payments will not be collected.
Interest income on consumer and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection. Consumer loans are charged off at 180 days past due and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Past-due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.
All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. The amount of interest accrued but not received for loans placed on nonaccrual and reversed against interest income was $1.2 million, $812,000 and $429,000 for the years ended December 31, 2025, 2024 and 2023, respectively. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Modifications of loans to existing borrowers generally consist of interest rate reductions, extension of payment terms, or a combination of these. Modifications may arise either voluntarily through negotiations with the borrower or involuntarily through court order. Payment deferrals up to six months are generally considered to be short-term modifications. Generally, principal and accrued but unpaid interest is not voluntarily forgiven. A change to the allowance for credit losses is generally not recorded upon
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modification because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance methodology.
Residential real estate loans are made in accordance with underwriting policies and are fully documented. Credit worthiness is assessed based on significant credit characteristics including credit history and residential and employment stability. The Company does not engage in any hybrid loan programs. In addition, the Company does not have any exposure to loans with negative amortization, interest rate carryover or discounting of the initial rates (teaser rates).
An updated appraisal of the collateral is obtained when a loan is first identified as a problem loan. Appraisals are reviewed annually and are updated as needed or are updated more frequently if significant changes are believed to have occurred in the collateral or market conditions. Appraisals of other real estate owned are also reviewed and updated consistent with this policy.
When a loan deteriorates to the point that the account officer or the Loan Committee concludes it no longer represents a viable asset, it will be charged off. Similarly, any portion of a loan that is deemed to no longer be a viable asset will be charged off. A loan will not be charged off unless such action has been approved by the branch President.
Acquired Loans
Loans acquired through business combinations are required to be carried at fair value as of the date of the combination. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date. The Company early adopted ASU 2025-08 effective for fiscal year-end 2025. Following the adoption, for loans that meet the definition of purchased seasoned loans and loans that are purchased credit deteriorated, the Company recognizes the acquired loans at their fair value plus an estimated allowance for credit losses. The acquisition date fair value plus the allowance for credit loss equals the loans new amortized cost basis as of the acquisition date. The difference between the new amortized cost basis and the unpaid principal balance of the loan represents the non-credit purchase discount/premium recorded. The difference between the fair value of loans and their principal balance is recognized in interest income on a level-yield method over the life of the loans. For loans which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments (as determined by the present value of expected future cash flows), the difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized in interest income on a level-yield method over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as yield adjustments or as loss accruals or valuation allowances. Increases in expected cash flows subsequent to the initial investment are recognized prospectively through adjustment of the yield on the loan over its remaining life. Decreases in expected cash flows are recognized as impairments. Any probable loss due to subsequent credit deterioration of the loans since acquisition is provided for in the allowance for credit losses and recorded through provision expense.
For loans acquired prior to 2025, the methodology of allowance for credit loss recorded for these acquired loans depended on whether the acquired loans were purchase credit deteriorated or non-purchase credit deteriorated. An allowance for credit loss for non-purchase credit deteriorated loans was determined and recorded in a manner consistent with originated loans. That is, the allowance for credit loss was calculated based on the loan’s amortized cost basis (i.e., the acquisition date fair value in a business combination) and was established through a charge to provision expense at the acquisition date.
Purchased Credit Deteriorated (PCD) Loans
The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.
Loans Held for Sale
The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including the interest rate, have already been set by the acquiring bank allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are carried at the lower of cost or fair value. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis. The Company does not sell residential mortgage loans with recourse other than obligations under standard representations
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and warranties or for fraud. These obligations relate to loan performance for the life of the loan. The amount of loans repurchased since the inception of the program is not considered to be material, and therefore, no reserve has been required.
Allowance for Credit Losses
The allowance for credit losses is a valuation account that is deducted from the loan's amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The allowance for credit losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs.
The Company considers various factors to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical loan loss experience and economic conditions.
Management estimates the allowance balance using relevant available information from internal and external sources, including information relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level or term as well as for changes in environmental conditions, such as the political, legal, and regulatory environment, technology and consumer preferences. Historical loss information is adjusted by the Company using these and other qualitative factors, including reasonable and supportable forecasts of changes in economic conditions. Forecast models are used to support management expectation of credit performance during the reasonable and supportable forecast period. Beyond the reasonable and supportable forecast period, the loss expectation reverts to the historical average, which is determined by the weighted average life of each loan pool.
If a loan is individually evaluated a specific allowance is provided, if necessary, so that the loan is reported net, at the fair value of collateral. Interest payments on collateral dependent loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Loans, or portions thereof, are charged off when deemed uncollectible. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.
Determining the Contractual Term
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless the following applies: the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
Off-Balance Sheet Credit Exposures
The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.
Allowance for Credit Losses on Available-for-Sale Debt Securities
The Company reviews its portfolio of debt securities in an unrealized loss position at least quarterly. The Company first assesses whether it intends to sell or it is more-likely-than-not that it will be required to sell the securities before recovery of the amortized cost basis. If either of these criteria is met, the security's amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, the Company considers, among other things, the performance of any underlying collateral and adverse conditions specifically related to the security. At December 31, 2025 approximately 97% and at December 31, 2024 approximately98% of the available for sale debt securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies. The Company does not consider the unrealized loss position of these securities to be the result of credit factors, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not
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be required to sell the securities before their anticipated recovery. Therefore, the Company has not recorded an allowance for credit losses against its debt securities portfolio, as the credit risk is not material.
Nonaccrual Policy
A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is not probable. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is reasonably expected. Otherwise, interest income is not recognized until the principal balance is fully collected.
The Company does not accrue interest on (1) any loan upon which a default of principal or interest has existed for a period of 90 days or over unless the collateral margin or guarantor support are such that full collection of principal and interest are not in doubt and an orderly plan for collection is in process; and (2) any other loan for which it is expected full collection of principal and interest is not probable.
A nonaccrual loan may be restored to an accrual status when none of its principal and interest are past due and unpaid or otherwise becomes well secured and in the process of collection and when prospects for collection of future contractual payments are no longer in doubt. With the exception of a formal debt forgiveness agreement, no loan which has had principal charged-off shall be restored to accrual status unless the charged-off principal has been recovered.
Premises and Equipment
Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is charged to operating expense and is computed using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred while improvements are capitalized. Premises and equipment is tested for impairment if events or changes in circumstances occur that indicate that the carrying amount of any premises and equipment may not be recoverable. Impairment losses are measured by comparing the fair values of the premises and equipment with their recorded amounts. Premises that are identified to be sold are transferred to other real estate owned at the lower of their carrying amounts or their fair values less estimated costs to sell. Any losses on premises identified to be sold are charged to operating expense. When premises and equipment are transferred to other real estate owned, sold, or otherwise retired, the cost and applicable accumulated depreciation are removed from the respective accounts and any resulting gains or losses are reported in the consolidated statements of comprehensive income. Construction in progress includes all the costs of construction associated with the building of fixed long-term assets and is included in premises and equipment, net as an asset. When construction is completed, the asset is reclassified as a building or a leasehold improvement and depreciated over its applicable useful life.
Leases
Operating and finance leases are included as right of use lease assets in accrued interest receivable and other assets on the consolidated balance sheet and a related lease liability is included in accrued interest payable and other liabilities on the consolidated balance sheet. Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The lease liability is measured as the present value of the unpaid lease payments, and the right of use assets value is derived from the calculation of the lease liability. To calculate the discount rate for each lease, the Company uses the rate implicit in the lease if available, otherwise an appropriate Federal Home Loan Bank ("FHLB") advance borrowing rate is used that correlates with the term of the lease.
Other Real Estate Owned
Other real estate owned ("OREO") consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell. Losses arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on premises identified to be sold are charged to operating expense at the time of transfer from premises to OREO. Losses from declines in value of the properties subsequent to classification as OREO are charged to operating expense. Revenues and expenses for OREO property are included in the consolidated statements of comprehensive income for the period in which they occur. Gross rental income for OREO is included in other non-interest income. The expenses of operating or holding OREO property are included in noninterest expense.
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Intangible Assets and Goodwill
Core deposit intangibles are amortized on a straight-line basis over the estimated useful lives of seven to ten years and customer relationship intangibles are amortized on a straight-line basis over the estimated useful life of three to eighteen years. Goodwill is not amortized but is evaluated at a reporting unit level at least annually for impairment, or more frequently if other indicators of impairment are present. At least annually in the fourth quarter, intangible assets are evaluated for possible impairment. Impairment losses are measured by comparing the fair values of the intangible assets with their recorded amounts. Any impairment losses are reported in the consolidated statements of comprehensive income.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2025 were $3.2 million. Advertising costs for the years ended December 31, 2024 and 2023 were $3.4 million and $3.2 million, respectively.
Stock-based Compensation
The Company recognizes stock-based compensation as compensation expense in the consolidated statements of comprehensive income based on the fair value of the Company’s stock options and restricted stock units ("RSU's") on the measurement date, which, for the Company, is the date of the grant. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model and was based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each RSU granted is equal to the market price of the Company’s stock at the date of grant. The fair value of each option and RSU is expensed over its vesting period.
Income Taxes
The Company files a consolidated income tax return with its subsidiaries. Federal and state income tax expense or benefit has been allocated to subsidiaries on a separate return basis. Deferred taxes are recognized under the balance sheet method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized.
Earnings Per Common Share
Basic earnings per common share is computed by dividing net income, less any preferred dividends requirement, by the weighted average of common shares outstanding. Diluted earnings per common share reflects the potential dilution that could occur if options, RSU's, convertible securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.
Revenue Recognition
In addition to lending and related activities, the Company offers various services to customers that generate revenue. Contract performance typically occurs in one year or less. Incremental costs of obtaining a contract are expensed when incurred when the amortization period is one year or less.
Sales of real estate
The sale of real estate property is generally recognized, along with any associated gain or loss, when control of the property transfers to the buyer.
Service and transaction fees on depository accounts
Customers often pay certain fees to the bank to access the cash on deposit including certain non-transactional fees such as account maintenance or dormancy fees, and certain transaction-based fees such as non-sufficient funds fees, overdraft, ATM, wire transfer, or foreign exchange fees. Revenue is recognized when the transactions occur or as services are performed over primarily
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monthly or quarterly periods. Payment is typically received in the period the transactions occur, or in some cases, within 90 days of the service period.
Interchange Fees
Interchange fees, or “swipe” fees, are charges that merchants pay to the processors who, in turn, share that revenue with us and other card-issuing banks for processing electronic payment transactions. Interchange fees represent the portion of the debit card transaction amount that the card issuer retains to compensate it for processing transactions and providing rewards. Interchange fees are settled and recognized on a daily or monthly basis.
Insurance Commissions and Fees
Insurance commissions are received on the sale of insurance products, and revenue is recognized upon the placement date of the insurance policies or when such commissions are received. Payment is normally received within the policy period. In addition to placement, the Company also provides insurance policy related risk management services. Revenue is recognized as these services are provided. Performance-based commissions are recognized when received or earlier when, upon consideration of past results and current condition, the revenue is deemed not probable of reversal.
For accounts billed by BancFirst Insurance Services, Inc., commission revenue is recognized at the later of the billing date or the effective date of the related insurance policies. Commission revenue, for accounts that are directly billed by the insurance company to the insured, is recognized when determinable by BancFirst Insurance Services, Inc., which is generally when such commissions are received.
BancFirst Insurance Services, Inc. also receives contingent commissions from insurance companies as additional incentive for achieving specified premium volume goals and/or loss experience parameters relating to the insurance they place. Contingent commissions from insurance companies are recognized when determinable, which is generally when such commissions are received.
Trust
BancFirst offers trust services and acts as executor, administrator, trustee, transfer agent and in various other fiduciary capacities. There are four basic types of fees that are included in the trust department income. Administrative fees are assessed for managing trust accounts. Shareholder fees are received in connection with holding specific fund share classes. In return for these services, the mutual fund (or its distributor or investment advisor) pay a fee to BancFirst. Oil and gas fees are assessed for management of oil and gas related activities. There are also other types of fees charged on a one-time basis such as those related to opening and closing trust accounts. BancFirst records trust fees on a monthly, quarterly or annual basis based on the size of the asset being managed. Fees may be fixed or, where applicable, based on a percentage of transaction size of managed assets. These fees are recorded as revenue at the time the fee is billed, according to the agreement with the customer.
Comprehensive Income
Comprehensive income includes all changes in stockholders’ equity during a period, except those resulting from transactions with stockholders. Besides net income, other components of the Company’s comprehensive income includes the after tax effect of changes in the net unrealized gain/loss on debt securities available for sale. The Company’s policy is to release material stranded tax effects included in accumulated other comprehensive income on a specific identification basis.
Consolidated Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company considers cash and due from banks and interest-bearing deposits with banks as cash equivalents.
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Recent Accounting Pronouncements
Standards Not Yet Adopted:
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-11, “Interim Reporting - Narrow-Scope Improvement” improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied prospectively or retrospectively to all periods presented. The Company is still evaluating the impact this will have on the Company, but does not expect adoption of the standard to have a material impact on its consolidated financial statements.
In November 2024, FASB issued Accounting Standards Update ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” requiring disclosure of certain costs and expenses in the notes to financial statements. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The amendments may be applied prospectively or retrospectively to all periods presented. The Company intends to adopt on a prospective basis, though retrospective application is permitted. The Company does not expect adoption of the standard to have a material impact on its consolidated financial statements.
Standards Adopted During the Current Period:
In November 2025, FASB issued ASU No. 2025-08, “Financial Instruments - Credit Losses” expanding the population of acquired financial assets subject to the gross-up approach. The amendments in the update require that purchased seasoned loans (excluding credit cards) be accounted for using the gross-up approach, which will enhance comparability and consistency in the accounting for acquired financial assets. This ASU is effective for fiscal years beginning after December 15, 2026 on a prospective basis for loans that are acquired on or after the initial application date. Early adoption is permitted in an interim or annual reporting period in which financial statements have not been issued. The Company opted to early adopt the standard in connection with the acquisition of ABOK and the adoption of the standard did not have a material impact on the Company's consolidated financial statements.
In December 2023, FASB issued ASU No. 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. The Company adopted the standard on a prospective basis showing only the adopted information for the year ended December 31, 2025. The adoption of the standard did not have a material impact on the Company's consolidated financial statements.
(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS
On November 17, 2025, the Company acquired ABOK, for aggregate consideration totaling approximately $33 million. ABOK shareholders had the option to exchange their shares for shares in the Company or receive cash. Cash consideration was capped at 40% of the total merger consideration. As of December 31, 2025, fair value of the Company's common stock issued for the acquisition was $22.7 million and cash paid was $6.3 million. As of December 31, 2025, not all ABOK shareholders had exchanged their shares. The fair value of assets acquired was approximately $416.6 million and the fair value of liabilities assumed was approximately $383.3 million. The fair value of these assets and liabilities is based upon preliminary evaluation and not yet finalized. The Company expects to complete the evaluation within the one-year allowable period. ABOK was a community bank headquartered in Collinsville, Oklahoma with six banking locations in Oklahoma. At acquisition, ABOK had approximately $414 million in total assets, $244 million in loans and $341 million in deposits. ABOK operated as a subsidiary of BancFirst Corporation until February 13, 2026 when ABOK was merged into BancFirst. As a result of the acquisition, the Company recorded a core deposit intangible of approximately $11.6 million and goodwill of approximately $476,000. The Company did not incur a material amount of acquisition-related expenses. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. Pro forma information has not been presented because the acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of ABOK complements the Company by expanding the Company's banking communities in Oklahoma.
On July 20, 2023, BancFirst purchased approximately $2.5 million in total assets, which included $2.1 million in loans, and assumed $10.8 million in deposits and other obligations, from RCB Bank's Stroud, Oklahoma branch. RCB Bank paid BancFirst $7.8 million as a result of this transaction. The fair value of assets acquired was approximately $3.0 million and the fair value of
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liabilities assumed was approximately $10.8 million. In addition, the Company recorded a core deposit intangible of $252,000 and goodwill of $209,000. The Company did not incur a material amount of purchase-related expenses. The effect of this purchase was included in the consolidated financial statement of the Company from the date of purchase forward. The purchase did not have a material effect on the Company's consolidated financial statements. The purchase of this branch strengthens BancFirst's presence in the Stroud, Oklahoma community.
(3) CASH, DUE FROM BANKS, INTEREST-BEARING DEPOSITS AND FEDERAL FUNDS SOLD
The Company maintains accounts with the Federal Reserve Bank and various other financial institutions primarily for the purpose of holding excess liquidity and clearing cash items. It may also sell federal funds to certain of these institutions on an overnight basis. At December 31, 2025 and 2024, the Company had no significant concentrations of credit risk with other financial institutions. The Company maintained vault cash and funds on deposit with the Federal Reserve Bank as follows:
December 31,
(Dollars in thousands)
(4) SECURITIES
The following table summarizes the amortized cost and estimated fair values of debt securities held for investment:
AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue
(Dollars in thousands)
Mortgage backed securities (1) $ 1 $ — $ — $ 1
States and political subdivisions 60 — — 60
Mortgage backed securities (1) $ 2 $ — $ — $ 2
States and political subdivisions 335 — — 335
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The following table summarizes the amortized cost and estimated fair values of debt securities available for sale:
AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue
(Dollars in thousands)
(1)
Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.
The maturities of debt 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.
December 31,
AmortizedCost EstimatedFairValue AmortizedCost EstimatedFairValue
(Dollars in thousands)
Held for Investment