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BANCFIRST CORP /OK/ (BANF)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 EPS was $1.50, a year-over-year decline from $1.72, but ahead of management-cited consensus ($1.39), driven by loan and deposit growth and slight margin improvement quarter-over-quarter .
  • Total revenue (net interest + noninterest income) was $151.0M, down ~3.8% YoY due to Durbin-related interchange headwinds, but up modestly QoQ; net interest margin improved to 3.70% vs 3.67% in Q4 2023 .
  • Asset quality remained strong but with higher nonaccruals (0.54% of loans vs 0.32% at YE23) and higher net charge-offs (0.05% of average loans) reflecting normalization; allowance/loans stayed ~1.25% .
  • Near-term stock catalysts: evidence of deposit mix stabilization, continued loan growth, and margin resilience despite “higher-for-longer” rates; management commentary was constructive on positioning and liquidity .

What Went Well and What Went Wrong

What Went Well

  • Loan growth (+$127.7M QoQ to $7.79B) and deposit growth (+$209.5M QoQ to $10.91B), supporting NIM improvement to 3.70% vs 3.67% in Q4 2023 .
  • Management sees “early signs of a stabilization in our deposit mix” and highlighted strong asset quality and steady CECL reserve percentage; quote: “solid quarter fueled by loan growth, deposit growth, and early signs of a stabilization in our deposit mix” — David Harlow .
  • Efficiency ratio improved materially to 54.82% from 59.79% in Q4 2023, reflecting operating discipline even as noninterest expense rose modestly .

What Went Wrong

  • Noninterest income declined to $44.9M from $47.8M YoY, primarily from an approximate $5.3M reduction in interchange fees due to the Durbin Amendment (structural headwind) .
  • Asset quality metrics worsened sequentially: nonaccrual loans rose to $42.0M (0.54% of loans) and net charge-offs increased to $3.5M vs $0.29M in Q1 2023, though still at conservative levels .
  • Net interest income was down YoY ($106.1M vs $109.2M) as deposit rate/mix shifts weighed, despite higher loan volumes; NIM down YoY (3.70% vs 3.89%) .

Financial Results

Income and EPS

MetricQ1 2023Q4 2023Q1 2024
Net interest income ($USD Millions)$109.2 $105.1 $106.1
Noninterest income ($USD Millions)$47.8 $45.2 $44.9
Total Revenue ($USD Millions)$157.0 $150.2 $151.0
Diluted EPS ($USD)$1.72 $1.46 $1.50

Margins and Profitability

MetricQ1 2023Q4 2023Q1 2024
Net interest margin (%)3.89 3.67 3.70
Efficiency ratio (%)51.16 59.79 54.82
Return on average assets (%)1.90 1.58 1.63
Return on average equity (%)18.31 13.98 13.96

KPIs and Balance Sheet

MetricQ3 2023Q4 2023Q1 2024
Total assets ($USD Billions)$12.11 $12.37 $12.60
Loans ($USD Billions)$7.48 $7.66 $7.79
Deposits ($USD Billions)$10.53 $10.70 $10.91
Sweep accounts ($USD Billions)$4.00 $4.30 $4.60
Nonaccrual loans ($USD Millions)$16.7 (0.22%) $24.6 (0.32%) $42.0 (0.54%)
Allowance to total loans (%)1.31 1.26 1.25
Net charge-offs to avg loans (%)0.02 0.02 0.05
Book value/share ($)41.63 43.54 44.57
Tangible book value/share ($)35.56 37.50 38.56

Noninterest Income Breakdown

MetricQ1 2023Q4 2023Q1 2024
Trust revenue ($USD Millions)$4.22 $5.11 $5.09
Service charges on deposits ($USD Millions)$21.23 $16.84 $16.43
Insurance commissions ($USD Millions)$8.74 $7.22 $9.46
Cash management ($USD Millions)$6.73 $7.88 $8.65
Other ($USD Millions)$6.51 $8.96 $5.05

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidanceFY2024None providedNone providedMaintained (no formal ranges disclosed)
Dividend per share declared ($)Q1 2024$0.43 (Q4 2023) $0.43 Maintained

Note: Management discussed deposit mix stabilization, loan growth, margin resilience, and a constructive liquidity/positioning outlook but did not issue quantitative guidance ranges .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 2023)Current Period (Q1 2024)Trend
Deposit mix and pricingShift from noninterest-bearing to interest-bearing deposits; pricing pressure impacting margin “Early signs of stabilization in our deposit mix” and deposit growth QoQ Improving mix; stabilization emerging
Durbin Amendment impactFirst full quarter impact; ~-$5.4M on interchange; noninterest income down ~$5.3M interchange reduction YoY; noninterest income down vs Q1 2023 Ongoing structural headwind
Loan growthContinued growth; +$526.7M vs YE22 by Q3 2023 +$127.7M QoQ to $7.79B; QTD April loans up $246M per management Strong, above plan
Net interest margin3.73% in Q3; 3.67% in Q4; pressure from deposit mix/rates 3.70% in Q1; marginal improvement vs Q4; benefited from repricing and securities rollover Stabilizing to slightly up QoQ
Asset qualityVery strong; low NCOs; nonaccruals rising modestly Still strong but higher nonaccruals and NCOs; allowance/loans steady Normalizing but within strong levels
Regulatory oversightN/ATransitioned primary federal regulator to the Federal Reserve; early experience positive Structurally changed oversight; positive tone

Management Commentary

  • “The Company reported a solid quarter fueled by loan growth, deposit growth, and early signs of a stabilization in our deposit mix. Asset quality remained strong… Recent inflation data has been higher than anticipated causing the Federal Reserve to signal higher rates for longer which will impact everyone including banks.” — David Harlow, CEO .
  • “’23 it was a very good year for us; first quarter of '24 was… $1.50 a share and the consensus was $1.39 — a good beat… Loan growth… deposit growth… our margin… had some improvement in margin… securities mature… moving into Fed funds at 5.25%… noninterest income continues to perform well, absent Durbin… asset quality… capital level… very, very strong.” — David Harlow (Shareholder/Analyst Meeting) .
  • Liquidity and funding: “We don't have any broker deposits, no listing deposits, still continue to be funded by our core deposits in our community banking system. So very, very strong there.” — David Harlow .

Q&A Highlights

  • EPS beat vs consensus and margin resiliency: Management highlighted $1.50 EPS vs $1.39 consensus and a NIM uptick to ~3.71% in Q1, citing loan repricing and securities roll-down into Fed funds .
  • Deposit mix and liquidity: Emphasis on deposit growth, improving mix, and robust on-balance-sheet liquidity (> $2.2B with the Fed), with no brokered or listing deposits .
  • Regulatory transition: Early interactions with the Federal Reserve as primary regulator were described as positive, with continued focus on regulatory expectations across BancFirst, Pegasus, and Worthington .

Estimates Context

  • EPS: Actual $1.50 vs management-cited consensus $1.39 — a beat of +$0.11 (+7.9%). External coverage (Zacks via Nasdaq) cited consensus $1.37, implying a +$0.13 (+9.5%) beat — methodologies differ slightly across sources .
  • Revenue: Actual $151.0M (NII + noninterest) vs external consensus $147.75M: beat of +2.2% .
  • S&P Global (Capital IQ) consensus data was unavailable at the time of request due to API limits; we anchored to company commentary and credible external coverage for context .

Key Takeaways for Investors

  • Margin resilience: NIM improved QoQ to 3.70% despite deposit rate competition; loan repricing and securities roll-down into higher-yield cash aided spreads .
  • Growth engines intact: Continued loan and deposit growth underscore organic momentum and support revenue stability in a higher-rate environment .
  • Structural headwind from Durbin persists: ~$5.3M interchange impact weighed on noninterest income YoY; expect continued drag in 2024 per prior commentary .
  • Asset quality strong but normalizing: Higher nonaccruals and NCOs warrant monitoring; allowance coverage and conservative credit culture remain supportive .
  • Capital and liquidity strengths: Robust common equity and liquidity (> $2.2B at Fed) with core deposit funding, no brokered deposits — defensive positioning if macro slows .
  • Regulatory evolution: Transition to Federal Reserve oversight adds rigor; early feedback positive, but expect incremental compliance costs at >$10B asset level .
  • Near-term setup: EPS/revenue beat vs consensus and signs of deposit mix stabilization are positive sentiment drivers; watch for margin trajectory and asset quality trends as catalysts for estimate revisions and stock reaction .