BANCFIRST CORP /OK/ - 10-Q Quarterly Report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-14384

BancFirst Corporation

(Exact name of registrant as specified in charter)

Oklahoma

73-1221379

(State or other Jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

101 N. Broadway, Oklahoma City, Oklahoma

73102-8401

(Address of principal executive offices)

(Zip Code)

(405) 270-1086

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨ .

As of October 31, 2004 there were 7,833,496 shares of the registrant’s Common Stock outstanding.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEET

(Unaudited)

(Dollars in thousands)


	September 30,						December 31, 2003
	2004			2003			December 31, 2003
ASSETS
Cash and due from banks	$	125,788		$	140,187		$	155,367
Interest-bearing deposits with banks		1,008			26,034			3,761
Federal funds sold		170,500			203,850			105,809
Securities (market value: $559,776, $527,490 and $566,461, respectively)		558,465			525,520			564,735
Loans:
Total loans (net of unearned interest)		2,036,025			1,801,010			1,947,223
Allowance for loan losses		(25,568	)		(24,890	)		(26,148	)

Loans, net		2,010,457			1,776,120			1,921,075
Premises and equipment, net		66,954			60,558			66,423
Other real estate owned		2,813			2,325			3,428
Intangible assets, net		4,202			1,068			4,726
Goodwill		27,561			20,235			27,611
Accrued interest receivable		18,134			17,348			19,006
Other assets		50,856			46,800			49,428

Total assets	$	3,036,738		$	2,820,045		$	2,921,369

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	806,856		$	642,839		$	720,366
Interest-bearing		1,857,913			1,842,620			1,865,324

Total deposits		2,664,769			2,485,459			2,585,690
Short-term borrowings		16,183			17,338			16,610
Accrued interest payable		2,988			3,238			3,741
Other liabilities		20,327			23,610			21,546
Long-term borrowings		7,894			12,151			11,063
Junior subordinated debentures		51,804			25,000			25,000
Minority interest		2,245			2,317			2,347

Total liabilities		2,766,210			2,569,113			2,665,997

Commitments and contingent liabilities
Stockholders’ equity:
Common stock, $1.00 par (shares issued and outstanding: 7,830,008, 7,815,364 and 7,822,637, respectively)		7,830			7,815			7,823
Capital surplus		62,485			60,406			60,819
Retained earnings		194,611			171,088			176,893
Accumulated other comprehensive income, net of income tax of $2,576, $5,636 and $5,128, respectively		5,602			11,623			9,837

Total stockholders’ equity		270,528			250,932			255,372

Total liabilities and stockholders’ equity	$	3,036,738		$	2,820,045		$	2,921,369

The accompanying notes are an integral part of these consolidated financial statements.

BANCFIRST CORPORATION

CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
INTEREST INCOME
Loans, including fees	$	30,247		$	28,140		$	87,589		$	86,228
Securities:
Taxable		5,366			4,981			15,661			16,700
Tax-exempt		354			363			1,112			1,191
Federal funds sold		708			598			1,888			1,825
Interest-bearing deposits with banks		2			22			24			61

Total interest income		36,677			34,104			106,274			106,005

INTEREST EXPENSE
Deposits		5,516			6,226			16,535			22,083
Short-term borrowings		88			63			213			220
Long-term borrowings		130			197			428			1,084
Junior subordinated debentures		1,103			612			3,007			1,835

Total interest expense		6,837			7,098			20,183			25,222

Net interest income		29,840			27,006			86,091			80,783
Provision for loan losses		879			524			1,800			2,369

Net interest income after provision for loan losses		28,961			26,482			84,291			78,414

NONINTEREST INCOME
Trust revenue		1,156			1,053			3,279			3,228
Service charges on deposits		6,875			6,478			20,549			19,087
Securities transactions		2			—			(146	)		3,079
Income from sales of loans		636			639			1,316			1,694
Other		3,784			3,294			11,898			10,132

Total noninterest income		12,453			11,464			36,896			37,220

NONINTEREST EXPENSE
Salaries and employee benefits		15,875			14,552			47,437			42,933
Occupancy and fixed assets expense, net		1,646			1,645			4,853			4,423
Depreciation		1,591			1,416			4,480			3,957
Amortization of intangible assets		170			119			524			403
Data processing services		589			583			1,871			1,684
Net expense from other real estate owned		73			168			354			175
Loss on early extinguishment of debt		—			—			—			2,429
Marketing and business promotion		835			702			2,445			2,069
Other		6,455			7,843			19,018			20,908

Total noninterest expense		27,234			27,028			80,982			78,981

Income before taxes		14,180			10,918			40,205			36,653
Income tax expense		(4,867	)		(3,527	)		(14,064	)		(12,592	)

Net income		9,313			7,391			26,141			24,061
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities		2,331			(4,241	)		(4,330	)		(2,275	)
Reclassification adjustment for (gains) losses included in net income		(1	)		—			95			(2,001	)

Comprehensive income	$	11,643		$	3,150		$	21,906		$	19,785

NET INCOME PER COMMON SHARE
Basic	$	1.19		$	0.95		$	3.34		$	3.07

Diluted	$	1.17		$	0.93		$	3.27		$	3.02

The accompanying notes are an integral part of these consolidated financial statements.

BANCFIRST CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Nine Months Ended September 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES	$	33,935		$	23,474

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities:
Held for investment		(2,174	)		(1,688	)
Available for sale		(151,920	)		(146,862	)
Maturities of securities:
Held for investment		7,342			14,958
Available for sale		140,232			79,407
Proceeds from sales and calls of securities:
Held for investment		1,001			1,934
Available for sale		3,201			87,060
Net increase in federal funds sold		(64,691	)		(69,850	)
Purchases of loans		(3,177	)		(16,063	)
Proceeds from sales of loans		102,013			155,728
Net other increase in loans		(192,593	)		(129,413	)
Purchases of premises and equipment		(5,948	)		(5,401	)
Proceeds from the sale of other real estate owned and repossessed assets		3,522			3,608
Other, net		1,388			648

Net cash used by investing activities		(161,804	)		(25,934	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand, transaction and savings deposits		133,482			160,108
Net decrease in certificates of deposits		(54,403	)		(103,297	)
Net decrease in short-term borrowings		(427	)		(7,105	)
Net decrease in long-term borrowings		(3,169	)		(21,936	)
Issuance of junior subordinated debentures		26,804			—
Issuance of common stock		1,705			1,211
Acquisition of common stock		(2,349	)		(16,185	)
Cash dividends paid		(6,106	)		(5,220	)

Net cash provided by financing activities		95,537			7,576

Net (decrease) increase in cash and due from banks		(32,332	)		5,116
Cash and due from banks at the beginning of the period		159,128			161,105

Cash and due from banks at the end of the period	$	126,796		$	166,221

SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest	$	20,936		$	27,595

Cash paid during the period for income taxes	$	12,694		$	11,575

The accompanying notes are an integral part of these consolidated financial statements.

BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Dollars in thousands, except per share data)

(1) GENERAL

The accompanying consolidated financial statements include the accounts of BancFirst Corporation, Century Life Assurance Company, Council Oak Partners, LLC, and BancFirst and its subsidiaries (the “Company”). The operating subsidiaries of BancFirst are Council Oak Investment Corporation, Citibank Insurance Agency, Inc., BancFirst Agency, Inc., Lenders Collection Corporation, Express Financial Corporation, and PremierSource LLC. Three other operating subsidiaries of BancFirst, Mojave Asset Management Company, Desert Asset Management Company, and Delamar Asset Management Limited Partnership, were liquidated and dissolved in August 2004. 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.

The unaudited interim financial statements contained herein reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature. There have been no significant changes in the accounting policies of the Company since December 31, 2003, the date of the most recent annual report. Certain amounts in the 2003 financial statements have been reclassified to conform to the 2004 presentation.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 loan losses, income taxes and the fair values of financial instruments. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

(2) STOCK-BASED COMPENSATION

The Company uses the intrinsic value method, as described in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations, for accounting for its stock-based compensation. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“FAS 123”), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure-an amendment of FASB Statement No. 123,” which, if fully adopted by the Company, would change the method the Company applies in recognizing the cost of these plans to the fair value method. Adoption of the cost recognition provisions of FAS 123 is optional and the Company has not adopted such provisions. However, pro forma disclosures as if the Company adopted the cost recognition provisions of FAS 123 in 1995 are required and are presented below.


	Three Months Ended September 30,								Nine Months Ended September 30,
	2004				2003				2004				2003
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
APB 25 charge	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
FAS 123 charge		—		160		—		164		—		468		—		505
Net income		9,313		9,153		7,391		7,227		26,141		25,673		24,061		23,556
Net income per share:
Basic	$	1.19	$	1.17	$	0.95	$	0.93	$	3.34	$	3.28	$	3.07	$	3.00
Diluted		1.17		1.15		0.93		0.91		3.27		3.21		3.02		2.95

The effects of applying SFAS No. 123 to the pro forma disclosure are not indicative of future results. SFAS No. 123 does not apply to grants of options prior to 1995 and the Company anticipates making additional grants in the future.

(3) RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN 46”) which provides guidance for determining when an entity should consolidate another entity that meets the definition of a variable interest entity. Special purpose entities and other types of entities are assessed for consolidation under this new guidance. FIN 46 requires a variable interest entity to be consolidated if the company will absorb a majority of the expected losses, will receive a majority of the expected residual returns, or both. FIN 46 was effective immediately for interests in variable interest entities acquired after January 31, 2003. It applied in the first interim period after June 15, 2003 to interests in variable interest entities acquired before February 1, 2003. As of October 9, 2003, the FASB deferred compliance with FIN 46 from July 1, 2003 to the first period ending after December 15, 2003 for variable interest entities created prior to February 1, 2003. However, the Company adopted FIN 46 on July 1, 2003, as originally issued, and de-consolidated BFC Capital Trust I. In December 2003, the FASB issued a revision of FIN 46 (“Revised FIN 46”) that codified the proposed modifications and other decisions previously issued through certain FASB Staff Positions, made other revisions, and superceded the original FIN 46. The effect of this de-consolidation was to remove the $25,000 of 9.65% Capital Securities and the related interest expense from the Company’s consolidated financial statements, and instead report the $25,000 as part of Junior Subordinated Debentures issued by BancFirst Corporation to the Trust, and the related interest expense thereon. A potential result of the de-consolidation of the Trust could be that the 9.65% Capital Securities and the 7.20% Cumulative Trust Preferred Securities described in note (4) would no longer be included in the Company’s Tier 1 capital. The Federal Reserve Board has issued interim guidance that allows such securities to continue to qualify as Tier 1 capital while the issue of de-consolidation continues under review. In May 2004, the Federal Reserve Board requested public comment on a proposed rule that would retain trust preferred securities in Tier 1 capital, but with stricter limits.

In May 2003, the FASB issued FAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement is effective for all new and modified financial instruments beginning with the first interim period beginning after June 15, 2003. FAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be accounted for as equity and requires that those instruments be classified as liabilities, or assets in certain circumstances. The adoption of this new standard did not have a material effect on the Company’s consolidated financial statements.

In March 2004, the FASB ratified EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” (“EITF 03-1”) which provides guidance on recognizing other-than-temporary impairments on certain investments. The Issue is effective for other-than-temporary impairment evaluations for investments accounted for under FAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” as well as non-marketable equity securities accounted for under the cost method for reporting periods beginning after June 15, 2004. The adoption of this new standard did not have a material effect on the Company’s consolidated financial statements.

(4) RECENT DEVELOPMENTS; MERGERS, ACQUISITIONS AND DISPOSALS

In January 2003, the Company repurchased 320,000 shares of its common stock for $14,400. The shares were repurchased through a market-maker in the Company’s stock and the repurchase was not a part of the Company’s ongoing Stock Repurchase Program.

In October 2003, the Company completed the acquisition of Lincoln National Bancorporation (“Lincoln”) of Oklahoma City, Oklahoma for cash of $16,949. Lincoln had consolidated total assets of approximately $107,673. As a result of the acquisition, Lincoln was merged into the Company, and Lincoln’s wholly-owned bank subsidiary, Lincoln National Bank, became a subsidiary of the Company and was merged into BancFirst in February 2004. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In November 2003, BancFirst completed the acquisition of the Hobart and Lone Wolf, Oklahoma branches of Gold Bank. As a result of the acquisition, BancFirst purchased approximately $16,256 of loans and other assets, and assumed approximately $40,465 of deposits, for a premium of approximately $2,731. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In January 2004, BancFirst Corporation established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. BancFirst Corporation owns all of the common securities of BFC II. In February 2004, BFC II issued $25,000 of aggregate liquidation amount of 7.20% Cumulative Trust Preferred Securities (the “Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $1,000 in Trust Preferred Securities through the execution of an over-allotment option. The proceeds from the sale of the Trust Preferred Securities and the common securities of BFC II were invested in $26,804 of 7.20% Junior Subordinated Debentures of BancFirst Corporation. Interest payments on the 7.20% Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the 7.20% Junior Subordinated Debentures is March 31, 2034, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Trust Preferred Securities represent an undivided interest in the 7.20% Junior Subordinated Debentures, are guaranteed by BancFirst Corporation, and currently qualify as Tier 1 regulatory capital but could potentially be excluded in the future as discussed in note (3). During any deferral period or during any event of default, BancFirst Corporation may not declare or pay any dividends on any of its capital stock.

In October 2004, the Company completed the acquisition of Wilcox & Jones, Inc., an independent insurance agency headquartered in Tulsa, Oklahoma for $4.8 million. As a result of the acquisition, Wilcox & Jones was merged into the Company and became a wholly-owned subsidiary of BancFirst Corporation. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition will be included in the Company’s consolidated financial statements from the date of the acquisition forward.

Also, in October 2004, the Company sold a minority interest it owned in a community bank and recognized a one-time gain of approximately $2.4 million.

(5) SECURITIES

The table below summarizes securities held for investment and securities available for sale.


	September 30,				December 31, 2003
	2004		2003		December 31, 2003
Held for investment at cost (market value; $33,616, $41,842 and $40,191, respectively)	$	32,305	$	39,872	$	38,465
Available for sale, at market value		526,160		485,648		526,270

Total	$	558,465	$	525,520	$	564,735

In June 2003, the Company sold $71,176 of available for sale securities and recognized a gain of $2,487. The sale was a part of a plan to adjust the Company’s interest rate sensitivity. The proceeds from this sale were reinvested in securities with shorter maturity dates. The table below summarizes the maturity of securities.


	September 30,				December 31, 2003
	2004		2003		December 31, 2003
Contractual maturity:
Within one year	$	82,311	$	165,215	$	151,919
After one year but within five years		430,238		330,618		363,300
After five years		30,053		18,243		35,163

Total debt securities		542,602		514,076		550,382
Equity securities		15,863		11,444		14,353

Total	$	558,465	$	525,520	$	564,735

At September 30, 2004, the Company held 205 securities available for sale that had unrealized gains. These securities had a market value totaling $417,048 and unrealized gains totaling $8,847. The Company also held 33 securities available for sale that had unrealized losses. These securities had a market value totaling $92,671 and unrealized losses totaling $830. These unrealized losses occurred due to increases in interest rates and spreads and not as a result of a decline in credit quality. The Company has both the intent and ability to hold these securities until the unrealized losses are recovered.

(6) LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:


	September 30,								December 31 2003
	2004				2003				December 31 2003
	Amount		Percent		Amount		Percent		Amount		Percent
Commercial and industrial	$	362,119	17.79	%	$	346,463	19.24	%	$	409,910	21.05	%
Agriculture		72,803	3.58			70,597	3.92			85,094	4.37
State and political subdivisions:
Taxable		3,117	0.15			279	0.02			221	0.01
Tax-exempt		16,475	0.81			18,109	1.01			20,560	1.06
Real Estate:
Construction		150,887	7.41			144,057	8.00			153,755	7.90
Farmland		81,261	3.99			73,840	4.10			83,843	4.31
One to four family residences		501,331	24.62			418,472	23.23			441,010	22.65
Multifamily residential properties		11,354	0.56			10,880	0.60			10,316	0.53
Commercial		523,136	25.69			430,985	23.92			455,961	23.41
Consumer		284,293	13.96			255,876	14.21			265,437	13.63
Other		29,249	1.44			31,452	1.75			21,116	1.08

Total loans	$	2,036,025	100.00	%	$	1,801,010	100.00	%	$	1,947,223	100.00	%

Loans held for sale (included above)	$	7,523			$	7,321			$	4,115

The Company’s loans are mostly to customers within Oklahoma and over half of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral. The amount of estimated loss due to credit risk in the Company’s loan portfolio is provided for in the allowance for loan losses. The amount of the allowance required to provide for all existing losses in the loan portfolio is an estimate based upon evaluations of loans, appraisals of collateral and other estimates which are subject to rapid change due to changing economic conditions and the economic prospects of borrowers. It is reasonably possible that a material change could occur in the estimated allowance for loan losses in the near term.

Changes in the allowance for loan losses are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Balance at beginning of period	$	25,921		$	25,004		$	26,148		$	24,367

Charge-offs		(1,472	)		(1,167	)		(3,242	)		(2,937	)
Recoveries		240			529			862			1,091

Net charge-offs		(1,232	)		(638	)		(2,380	)		(1,846	)

Provisions charged to operations		879			524			1,800			2,369

Balance at end of period	$	25,568		$	24,890		$	25,568		$	24,890

The net charge-offs by category are summarized as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Commercial, financial and other	$	476		$	454		$	1,031		$	818
Real estate – construction		(11	)		57			(7	)		72
Real estate – mortgage		459			(141	)		597			226
Consumer		308			268			759			730

Total	$	1,232		$	638		$	2,380		$	1,846

(7) NONPERFORMING AND RESTRUCTURED ASSETS

Below is a summary of nonperforming and restructured assets:


	September 30,						December 31, 2003
	2004			2003			December 31, 2003
Past due over 90 days and still accruing	$	1,699		$	1,880		$	2,674
Nonaccrual		8,399			13,757			13,381
Restructured		378			480			415

Total nonperforming and restructured loans		10,476			16,117			16,470
Other real estate owned and repossessed assets		3,167			2,696			3,939

Total nonperforming and restructured assets	$	13,643		$	18,813		$	20,409

Nonperforming and restructured loans to total loans		0.51	%		0.89	%		0.85	%

Nonperforming and restructured assets to total assets		0.45	%		0.67	%		0.70	%

(8) INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets:


	September 30,								December 31, 2003
	2004				2003				December 31, 2003
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Core deposit intangibles	$	6,297	$	2,095	$	4,145	$	3,078	$	7,981	$	3,255
Trademarks		20		20		20		19		20		20

Total	$	6,317	$	2,115	$	4,165	$	3,097	$	8,001	$	3,275

Amortization of intangible assets and estimated amortization of intangible assets are as follows:


Amortization:
Three months ended September 30, 2004	$	170
Three months ended September 30, 2003		119
Nine months ended September 30, 2004		524
Nine months ended September 30, 2003		403
Year ended December 31, 2003		580
Estimated Amortization:
Year ended December 31,
2004	$	694
2005		676
2006		638
2007		485
2008		384

The following is a summary of goodwill by business segment:


	Metropolitan Banks			Community Banks		Other Financial Services		Executive, Operations & Support		Eliminations			Consolidated
Three Months Ended September 30, 2004
Balance at beginning of period	$	13,204		$	14,212	$	—	$	1,713	$	(1,183	)	$	27,946
Adjustments		(385	)		—		—		—		—			(385	)

Balance at end of period	$	12,819		$	14,212	$	—	$	1,713	$	(1,183	)	$	27,561

Three Months Ended September 30, 2003
Balance at beginning and end of period	$	7,144		$	12,561	$	—	$	1,713	$	(1,183	)	$	20,235

Nine Months Ended September 30, 2004
Balance at beginning of period	$	12,993		$	14,088	$	—	$	1,713	$	(1,183	)	$	27,611
Acquisitions		211			124		—		—		—			335
Adjustments		(385	)		—		—		—		—			(385	)

Balance at end of period	$	12,819		$	14,212	$	—	$	1,713	$	(1,183	)	$	27,561

Nine Months Ended September 30, 2003
Balance at beginning and end of period	$	7,144		$	12,561	$	—	$	1,713	$	(1,183	)	$	20,235

(9) LONG-TERM BORROWINGS

In June 2003, the Company retired $25,100 of Federal Home Loan Bank advances under its line of credit, and recognized a loss on early extinguishment of debt of $2,429. This early retirement of the advances was part of a plan to adjust the Company’s interest rate sensitivity. These retired advances had fixed rates from 3.47% to 7.87% and maturities from 2008 to 2017.

(10) CAPITAL

The Company is subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System. These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s assets, liabilities, and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s consolidated financial statements. The required minimums and the Company’s respective ratios are shown below.


	Minimum Required		September 30,						December 31, 2003
	Minimum Required		2004			2003			December 31, 2003
Tier 1 capital			$	286,393		$	245,311		$	240,532
Total capital			$	312,099		$	270,287		$	266,765
Risk-adjusted assets			$	2,252,720		$	2,010,923		$	2,136,970
Leverage ratio	3.00	%		9.53	%		8.77	%		8.33	%
Tier 1 capital ratio	4.00	%		12.71	%		12.20	%		11.26	%
Total capital ratio	8.00	%		13.85	%		13.44	%		12.48	%

To be “well capitalized” under federal bank regulatory agency definitions, a depository institution must have a Tier 1 Ratio of at least 6%, a combined Tier 1 and Tier 2 ratio of at least 10%, and a leverage ratio of at least 5%. As of September 30, 2004 and 2003, and December 31, 2003, the Company was considered to be “well capitalized”. There are no conditions or events since the most recent notification of the Company’s capital category that management believes would change its category.

(11) STOCK REPURCHASE PLAN

In November 1999, the Company adopted a new Stock Repurchase Program (the “SRP”) authorizing management to repurchase up to 300,000 shares of the Company’s common stock. The SRP was amended in May 2001 to increase the shares authorized to be purchased by 277,916 shares and was amended again in August 2002 to increase the number of shares authorized to be purchased by 182,265 shares. The SRP may be used as a means to increase earnings per share and return on equity, to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options, and to provide liquidity for shareholders wishing to sell their stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and must be approved by the Company’s Executive Committee. At September 30, 2004 there were 208,126 shares remaining that could be repurchased under the SRP. Below is a summary of the shares repurchased under the program.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2004		2003		2004		2003
Number of shares repurchased		5,000		—		41,500		39,200
Average price of shares repurchased	$	58.90	$	—	$	56.85	$	45.54

(12) COMPREHENSIVE INCOME

The only component of comprehensive income reported by the Company is the unrealized gain or loss on securities available for sale. The amount of this unrealized gain or loss, net of tax, has been presented in the statement of income for each period as a component of other comprehensive income. Below is a summary of the tax effects of this unrealized gain or loss.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Unrealized gain (loss) during the period:
Before-tax amount	$	3,544		$	(6,435	)	$	(6,900	)	$	(3,401	)
Tax (expense) benefit		(1,213	)		2,194			2,570			1,126

Net-of-tax amount	$	2,331		$	(4,241	)	$	(4,330	)	$	(2,275	)

The amount of unrealized gain or loss included in accumulated other comprehensive income is summarized below.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Unrealized gain (loss) on securities:
Beginning balance	$	3,272		$	15,864		$	9,837		$	15,899
Current period change		2,331			(4,241	)		(4,330	)		(2,275	)
Reclassification adjustment for (gains) losses included in net income		(1	)		—			95			(2,001	)

Ending balance	$	5,602		$	11,623		$	5,602		$	11,623

(13) NET INCOME PER COMMON SHARE

Basic and diluted net income per common share are calculated as follows:


	Income (Numerator)		Shares (Denominator)	Per Share Amount
Three Months Ended September 30, 2004
Basic
Income available to common stockholders	$	9,313	7,827,370	$	1.19

Effect of stock options		—	160,367

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	9,313	7,987,737	$	1.17

Three Months Ended September 30, 2003
Basic
Income available to common stockholders	$	7,391	7,809,366	$	0.95

Effect of stock options		—	147,058

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	7,391	7,956,424	$	0.93

Nine Months Ended September 30, 2004
Basic
Income available to common stockholders	$	26,141	7,828,974	$	3.34

Effect of stock options		—	157,167

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	26,141	7,986,141	$	3.27

Nine Months Ended September 30, 2003
Basic
Income available to common stockholders	$	24,061	7,840,691	$	3.07

Effect of stock options		—	133,153

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	24,061	7,973,844	$	3.02

Below is the number and average exercise prices of options that were excluded from the computation of diluted net income per share for each period because the options’ exercise prices were greater than the average market price of the common shares.


	Shares	Average Exercise Price
Three Months Ended September 30, 2004	—	$	—
Three Months Ended September 30, 2003	—	$	—
Nine Months Ended September 30, 2004	—	$	—
Nine Months Ended September 30, 2003	29,328	$	50.16

(14) SEGMENT INFORMATION

The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The four principal business units are metropolitan banks, community banks, other financial services, and executive, operations and support. Metropolitan and community banks offer traditional banking products such as commercial and retail lending, and a full line of deposit accounts. Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. Community banks consist of banking locations in communities throughout Oklahoma. Other financial services are specialty product business units including guaranteed small business lending, guaranteed student lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units. The results of operations and selected financial information for the four business units are as follows:


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated
Three Months Ended: September 30, 2004
Net interest income (expense)	$	10,138	$	19,364	$	1,498	$	(1,160	)	$	—		$	29,840
Noninterest income		2,567		5,891		3,381		10,840			(10,226	)		12,453
Income before taxes		5,048		11,708		1,577		6,127			(10,280	)		14,180
September 30, 2003
Net interest income (expense)	$	7,393	$	18,213	$	1,810	$	(410	)	$	—		$	27,006
Noninterest income		2,179		5,658		3,236		13,672			(13,281	)		11,464
Income before taxes		3,443		11,098		1,423		8,277			(13,323	)		10,918

Nine Months Ended: September 30, 2004
Net interest income (expense)	$	28,260	$	56,358	$	4,516	$	(3,043	)	$	—		$	86,091
Noninterest income		7,791		17,367		9,354		33,711			(31,327	)		36,896
Income before taxes		14,328		33,774		3,469		20,059			(31,425	)		40,205
September 30, 2003
Net interest income (expense)	$	22,680	$	57,380	$	5,227	$	(4,505	)	$	—		$	80,783
Noninterest income		6,350		16,978		9,675		46,537			(42,320	)		37,220
Income before taxes		11,775		35,429		4,596		27,267			(42,414	)		36,653

Total Assets:
September 30, 2004	$	1,173,303	$	1,879,433	$	190,036	$	142,302		$	(348,336	)	$	3,036,738
September 30, 2003	$	985,332	$	1,786,915	$	183,045	$	547,395		$	(682,642	)	$	2,820,045

The financial information for each business unit is presented on the basis used internally by management to evaluate performance and allocate resources. The Company utilizes a transfer pricing system to allocate the benefit or cost of funds provided or used by the various business units. Certain revenues related to other financial services are allocated to the banks whose customers receive the services and, therefor, are not reflected in the income for other financial services. Certain services provided by the support group to other business units, such as item processing, are allocated at rates approximating the cost of providing the services. Eliminations are adjustments to consolidate the business units and companies.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

BANCFIRST CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SUMMARY

Net income for the third quarter of 2004 was $9.31 million, compared to $7.39 million for the third quarter of 2003. Diluted net income per share was $1.17, compared to $0.93 for the third quarter of 2003. For the first nine months of 2004, net income was $26.1 million, compared to $24.1 million for the first nine months of 2003. Diluted net income per share for the first nine months was $3.27, compared to $3.02 for the first nine months of 2003.

Total assets at September 30, 2004 increased to $3.04 billion, up $115 million from December 31, 2003 and up $217 million from September 30, 2003. Stockholders’ equity was $271 million at September 30, 2004, up $15.2 million from December 31, 2003 and up $19.6 million compared to September 30, 2003.

In October 2003, BancFirst Corporation completed the acquisition of Lincoln National Bancorporation (“Lincoln”) of Oklahoma City, Oklahoma for cash of $16.9 million. Lincoln had consolidated total assets of approximately $108 million. As a result of the acquisition, Lincoln was merged into BancFirst Corporation, and Lincoln’s wholly-owned bank subsidiary, Lincoln National Bank, became a subsidiary of BancFirst Corporation and was merged into BancFirst in February 2004. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

In November 2003, BancFirst completed the acquisition of the Hobart and Lone Wolf, Oklahoma branches of Gold Bank. As a result of the acquisition, BancFirst purchased approximately $16.3 million of loans and other assets, and assumed approximately $40.5 million of deposits, for a premium of approximately $2.73 million. The acquisition was accounted for as a purchase. Accordingly, the effects of the acquisition are included in the Company’s consolidated financial statements from the date of the acquisition forward.

RESULTS OF OPERATIONS

Third Quarter

Net interest income for the third quarter of 2004 was $29.8 million, up $2.83 million from the third quarter of 2003. The net interest margin increased to 4.34% from 4.22% for the third quarter of 2003. An increase in earning assets between the third quarter of 2004 and the third quarter of 2003, primarily in loans, produced a positive volume variance.

The Company provided $879,000 for loan losses in the third quarter of 2004, compared to $524,000 for the same period of 2003. The increase in the provision for loan losses resulted from overall loan growth during the quarter. The Company’s nonperforming loans decreased $5.64 million from a year ago to $10.5 million at September 30, 2004. The percentage coverage of allowance for loan losses to total nonperforming loans increased from 154.43% at September 30, 2003 to 244.06% at September 30, 2004. Net loan charge-offs were $1.23 million for the third quarter of 2004, compared to $638,000 for the third quarter of 2003. The net charge-offs represent an annualized rate of 0.25% of average total loans for the third quarter of 2004 versus 0.14% for the third quarter of 2003.

Noninterest income, excluding securities transactions, increased $987,000 compared to the third quarter of 2003 due to an increase in trust revenue, service charges on deposits, cash management and electronic banking services, and sales of insurance products. Noninterest expense increased $206,000 compared to the third quarter of 2003. During the third quarter of 2003, the Company incurred a $1.58 million provision to establish an allowance for uncollectibility of certain receivables carried in cash and due from banks. Excluding this provision, the increase in noninterest expense compared to the third quarter of 2003 was $1.79 million. The majority of this increase was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and also annual salaries increases that were effective in January 2004. Income tax expense increased $1.34 million compared to the third quarter of 2003. The effective tax rate on income before taxes was 34.3%, compared to 32.3% for the third quarter of 2003.

Year-To-Date

Net interest income for the first nine months of 2004 was $86.1 million, up $5.31 million from the first nine months of 2003. The net interest margin decreased to 4.22% for the first nine months of 2004 compared to 4.25% for the same period of 2003. An increase in earning assets between the first nine months of 2004 and the first nine months of 2003, primarily in loans, produced a positive volume variance that offset a negative rate variance. In addition, interest expense decreased $5.04 million from the first nine months of 2003 due to the repricing of interest bearing liabilities in the lower interest rate environment.

The Company provided $1.80 million for loan losses in the first nine months of 2004, compared to $2.37 million for the same period of 2003. The decrease in the provision for loan losses resulted from a decrease in nonperforming loans. The Company’s nonperforming loans decreased $5.64 million from a year ago to $10.5 million at September 30, 2004. The percentage coverage of allowance for loan losses to total nonperforming loans increased from 154.43% at September 30, 2003 to 244.06% at September 30, 2004. Net loan charge-offs were $2.38 million for the first nine months of 2004, compared to $1.85 million for the first nine months of 2003. The net charge-offs represent an annualized rate of 0.16% of average total loans for the first nine months of 2004 versus 0.14% for the first nine months of 2003.

Noninterest income, excluding securities transactions, for the first nine months of 2004 increased $2.90 million compared to the same period in 2003 due to an increase in service charges on deposits, cash management and electronic banking services, sales of insurance products and a gain of $421,000 on the sale of a minority interest in a community bank, offset by lower income from sales of loans. There was a loss of $146,000 on securities transactions in the first nine months of 2004, while gains of $3.08 million were recognized in the first nine months of 2003. Noninterest expense increased $2 million compared to the first nine months of 2003. The Company incurred a $1.58 million provision for uncollectible receivables in the third quarter of 2003, a $2.43 million loss on early extinguishment of debt in the second quarter of 2003, and an operational loss of $1.18 million recognized in the first quarter of 2003. Excluding these losses, the increase in noninterest expense compared to the first nine months of 2003 was $7.19 million. The majority of this increase was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003, and also annual salaries increases that were effective in January 2004. Income tax expense increased $1.47 million compared to the first nine months of 2003. The effective tax rate on income before taxes was 35.0%, compared to 34.4% for the first nine months of 2003.

FINANCIAL POSITION

The aggregate of cash and due from banks, interest-bearing deposits with banks, and federal funds sold increased $32.4 million from December 31, 2003, and decreased $72.8 million from September 30, 2003. The increase from December 31, 2003 was mainly from an increase in deposits, while the decrease from September 30, 2003 resulted from growth in loans and securities.

Total securities decreased $6.27 million compared to December 31, 2003 and increased $32.9 million compared to September 30, 2003. The size of the Company’s securities portfolio is a function of liquidity management and excess funds available for investment. The Company has maintained a very liquid securities portfolio to provide funds for loan growth. The net unrealized gain on securities available for sale, before taxes, was $8.18 million at the end of the third quarter of 2004, compared to an unrealized gain of $15.0 million at December 31, 2003 and a gain of $17.3 million at September 30, 2003. The average taxable equivalent yield on the securities portfolio for the third quarter of 2004 decreased to 4.16% from 4.26% for the same quarter of 2003.

Total loans increased $88.8 million from December 31, 2003, and increased $235 million from September 30, 2003. The increase compared to the third quarter of 2003 was due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003 and internal growth. The allowance for loan losses decreased $580,000 from year-end 2003 and increased $678,000 from the third quarter of 2003. The allowance as a percentage of total loans was 1.26%, 1.34% and 1.38% at September 30, 2004, December 31, 2003 and September 30, 2003, respectively. The allowance to nonperforming and restructured loans at the same dates was 244.06%, 158.76% and 154.43%, respectively.

Nonperforming and restructured loans totaled $10.5 million at September 30, 2004, compared to $16.5 million at December 31, 2003 and $16.1 million at September 30, 2003. The ratio of nonperforming and restructured loans to total loans for the same periods was 0.51%, 0.85% and 0.89%, respectively. The level of nonperforming loans and loan losses may rise over time as a result of economic and credit cycles.

Total deposits increased $79.1 million compared to December 31, 2003, and increased $179 million compared to September 30, 2003, due to the acquisitions of Lincoln and the Gold Bank branches in the fourth quarter of 2003 and internal growth. The Company’s deposit base continues to be comprised substantially of core deposits, with large denomination certificates of deposit being only 8.17% of total deposits at September 30, 2004, compared to 8.96% at December 31, 2003 and 8.67% at September 30, 2003.

Short-term borrowings decreased $427,000 from December 31, 2003, and decreased $1.16 million from September 30, 2003. Fluctuations in short-term borrowings are a function of federal funds purchased from correspondent banks, customer demand for repurchase agreements and liquidity needs of the bank.

Long-term borrowings decreased $3.17 million from year-end 2003 and $4.26 million from the third quarter of 2003 due to scheduled principal payments. The Company uses these borrowings primarily to match-fund, long-term fixed rate loans.

Junior subordinated debentures increased $26.8 million in the first nine months of 2004 due to the issuance of the 7.20% Junior Subordinated Debentures to BFC Capital Trust II.

Stockholders’ equity increased $15.2 million from year-end 2003 and $19.6 million from the third quarter of 2003, due to accumulated earnings offset by a decrease in unrealized gains in securities. Average stockholders’ equity to average assets for the third quarter of 2004 was 8.81%, compared to 8.82% for the third quarter of 2003. The Company’s leverage ratio and total risk-based capital ratio were 9.53% and 13.85%, respectively, at September 30, 2004, well in excess of the regulatory minimums.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See note (3) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

SEGMENT INFORMATION

See note (14) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.

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. Actual results may differ materially from forward-looking statements.

BANCFIRST CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2004			2003			2004			2003
Per Common Share Data
Net income – basic	$	1.19		$	0.95		$	3.34		$	3.07
Net income – diluted		1.17			0.93			3.27			3.02
Cash dividends		0.28			0.25			0.78			0.69
Performance Data
Return on average assets		1.22	%		1.04	%		1.15	%		1.14	%
Return on average stockholders’ equity		13.92			11.73			13.10			12.92
Cash dividend payout ratio		23.53			26.32			23.35			22.48
Net interest spread		3.94			3.84			3.85			3.82
Net interest margin		4.34			4.22			4.22			4.25
Efficiency ratio		64.39			70.26			65.85			66.93


	September 30,						December 31, 2003
	2004			2003			December 31, 2003
Balance Sheet Data
Book value per share	$	34.55		$	32.11		$	32.64
Tangible book value per share		30.49			29.38			28.51
Average loans to deposits (year-to-date)		73.86	%		73.32	%		73.33	%
Average earning assets to total assets (year-to-date)		91.04			91.26			91.24
Average stockholders’ equity to average assets (year-to-date)		8.81			8.82			8.81
Asset Quality Ratios
Nonperforming and restructured loans to total loans		0.51	%		0.89	%		0.85	%
Nonperforming and restructured assets to total assets		0.45			0.67			0.70
Allowance for loan losses to total loans		1.26			1.38			1.34
Allowance for loan losses to nonperforming and restructured loans		244.06			154.43			158.76

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)


	Three Months Ended September 30,
	2004							2003
	Average Balance			Interest Income/ Expense		Average Yield/ Rate		Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	1,999,693		$	30,384	6.04	%	$	1,793,929		$	28,292	6.26	%
Securities - taxable		529,666			5,366	4.03			481,675			4,981	4.10
Securities - tax exempt		35,051			545	6.18			34,611			558	6.40
Federal funds sold		201,022			710	1.40			260,608			620	0.94

Total earning assets		2,765,432			37,005	5.32			2,570,823			34,451	5.32

Nonearning assets:
Cash and due from banks		122,805							119,259
Interest receivable and other assets		169,405							153,386
Allowance for loan losses		(25,851	)						(24,903	)

Total nonearning assets		266,359							247,742

Total assets	$	3,031,791						$	2,818,565

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	425,729			306	0.29	%	$	375,838			331	0.35	%
Savings deposits		750,742			2,070	1.10			722,369			1,979	1.09
Time deposits		699,633			3,140	1.79			743,840			3,916	2.09
Short-term borrowings		28,549			88	1.23			27,423			63	0.91
Long-term borrowings		8,203			130	6.29			12,607			197	6.20
Junior subordinated debentures		51,804			1,103	8.47			25,000			612	9.71

Total interest-bearing liabilities		1,964,660			6,837	1.38			1,907,077			7,098	1.48

Interest-free funds:
Noninterest-bearing deposits		779,736							628,824
Interest payable and other liabilities		21,170							32,768
Stockholders’ equity		266,225							249,896

Total interest free funds		1,067,131							911,488

Total liabilities and stockholders’ equity	$	3,031,791						$	2,818,565

Net interest income				$	30,168						$	27,353

Net interest spread						3.94	%						3.84	%

Net interest margin						4.34	%						4.22	%

(1)	Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)


	Nine Months Ended September 30,
	2004							2003
	Average Balance			Interest Income/ Expense		Average Yield/ Rate		Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	1,959,779		$	87,977	6.00	%	$	1,807,442		$	86,701	6.41	%
Securities - taxable		532,399			15,661	3.93			501,600			16,700	4.45
Securities - tax exempt		36,170			1,712	6.32			37,316			1,832	6.56
Federal funds sold		227,006			1,912	1.12			229,432			1,886	1.10

Total earning assets		2,755,354			107,262	5.20			2,575,790			107,119	5.56

Nonearning assets:
Cash and due from banks		124,763							120,640
Interest receivable and other assets		172,370							150,739
Allowance for loan losses		(26,055	)						(24,650	)

Total nonearning assets		271,078							246,729

Total assets	$	3,026,432						$	2,822,519

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	431,913			923	0.29	%	$	377,014			1,264	0.45	%
Savings deposits		752,730			6,033	1.07			705,475			7,374	1.40
Time deposits		725,284			9,579	1.76			774,726			13,445	2.32
Short-term borrowings		27,385			213	1.04			26,449			220	1.11
Long-term borrowings		9,069			428	6.30			25,239			1,084	5.74
Junior subordinated debentures		46,005			3,007	8.73			25,000			1,835	9.81

Total interest-bearing liabilities		1,992,386			20,183	1.35			1,933,903			25,222	1.74

Interest-free funds:
Noninterest-bearing deposits		743,600							607,992
Interest payable and other liabilities		23,959							31,565
Stockholders’ equity		266,487							249,059

Total interest free funds		1,034,046							888,616

Total liabilities and stockholders’ equity	$	3,026,432						$	2,822,519

Net interest income				$	87,079						$	81,897

Net interest spread						3.85	%						3.82	%

Net interest margin						4.22	%						4.25	%

(1)	Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes in the Registrant’s disclosures regarding market risk since December 31, 2003, the date of its annual report to stockholders.

Item 4. Controls and Procedures.

The Company’s Chief Executive Officer, Chief Financial Officer and Disclosure Committee, which includes the Company’s Chief Risk Officer, Chief Asset Quality Officer, Chief Internal Auditor, Holding Company Controller, Bank Controller and General Counsel, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and procedures. Based on their evaluation they concluded that the disclosure controls and procedures of the Company are adequate to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

PART II – OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

On May 27, 2004, the Registrant amended its Amended and Restated Certificate of Incorporation to increase the number of shares of common stock that the Registrant has the authority to issue from 15,000,000 shares to 20,000,000 shares.

There were no equity securities of the Registrant sold without registration during the quarter covered by this report.

Stock repurchases by the Registrant during the quarter were as follows:


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
Month #1 (beginning July 1, 2004 and ending July 31, 2004)	5,000	$	58.90	5,000	208,126
Month #2 (beginning August 1, 2004 and ending August 31, 2004)	—		—	—	208,126
Month #3 (beginning September 1, 2004 and ending September 30, 2004)	—		—	—	208,126

Total	5,000	$	58.90	5,000	208,126

(1)

The Company’s Stock Repurchase Program was originally announced on November 18, 1999. The total number of shares authorized for repurchase under the Stock Repurchase Program is 760,181 shares. The Stock Repurchase Program will remain effective until the number of shares authorized is repurchased or until the board of directors terminates the program.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits


Exhibit Number		Exhibit
3.1		Second Amended and Restated Certificate of Incorporation (filed as Exhibit 1 to the Company’s Form 8-A/A filed July 23, 1998 and incorporated herein by reference).

3.2		Certificate of Designations of Preferred Stock (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and incorporated herein by reference).

3.3		Amended By-Laws (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992 and incorporated herein by reference).

3.4		Resolution of the Board of Directors amending Section XXVII of the Company’s By-Laws (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

3.5		Amendment to the Second Amended and Restated Certificate of Incorporation (filed as Exhibit 3.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference).

4.1		Instruments defining the rights of securities holders (see Exhibits 3.1, 3.2, 3.3 and 3.4 above).

4.2		Amended and Restated Declaration of Trust of BFC Capital Trust I dated as of February 4, 1997 (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference).

4.3		Form of 9.65% Series B Cumulative Trust Preferred Security Certificates for BFC Capital Trust I (included as Exhibit D to Exhibit 4.2).

4.4		Indenture dated as of February 4, 1997, relating to the 9.65% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust I (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated February 4, 1997 and incorporated herein by reference).

4.5		Form of Certificate of 9.65% Series B Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (included as Exhibit A to Exhibit 4.4).

4.6		Form of Series B Guarantee of BancFirst Corporation relating to the 9.65% Series B Cumulative Trust Preferred Securities of BFC Capital Trust I (filed as Exhibit 4.7 to the Company’s registration statement on Form S-4, File No. 333-25599, and incorporated herein by reference).

4.7		Amended and Restated Trust Agreement relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.8		First Amendment to Amended and Restated Trust Agreement (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated March 24, 2004 and incorporated herein by reference).

4.9		Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (included as Exhibit D to Exhibit 4.7).


Exhibit Number		Exhibit
4.10		Indenture relating to the 7.20% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust II (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.11		Guarantee of BancFirst Corporation relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K dated February 26, 2004 and incorporated herein by reference).

4.12		Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including as Exhibit A the form of Certificate of Designations of the Company setting forth the terms of the Preferred Stock, as Exhibit B the form of Right Certificate and as Exhibit C the form of Summary of Rights Agreement (filed as Exhibit 1 to the Company’s Current Report on Form 8-K dated February 25, 1999 and incorporated herein by reference).

10.1		Sixth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 4.1 to the Company’s Form S-8 Registration Statements filed October 8, 2004 and incorporated herein by reference).

31.1*		CEO’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31.2*		CFO’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

32.1*		CEO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		CFO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Filed herewith.

(b)	A report on Form 8-K dated October 21, 2004 was filed by the Company to file its press release dated October 21, 2004 announcing the results of its operations for the third quarter ended September 30, 2004.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BANCFIRST CORPORATION
		(Registrant)

Date November 9, 2004		/s/ Randy P. Foraker
		(Signature)
		Randy P. Foraker
		Executive Vice President
		Chief Risk Officer
		Treasurer/Assistant Secretary
		(Principal Accounting Officer)