BancFirst (BANF) Q3 2026 earnings review
BancFirst lending profit rises, but customer deposits shrink
BancFirst, an Oklahoma and Texas banking group, grew its profit by cutting deposit rates while its underlying lending slowed. Net interest income rose 8% from a year ago to $136 million, lifting diluted profit per share to $1.97. Chief executive David Harlow called credit quality stable, but past-due nonaccrual loans stayed elevated at $76 million because of one commercial borrower.
| Loans from businesses owned a year ago | +2.4% headline loans +5.4% (by our math) |
|---|---|
| Net interest income | $136.0M +8.3% from a year ago |
| Profit per share | $1.97 +6.5% from a year ago |
| Spirit Bank acquisition plan | Unchanged on schedule to close in October |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because wider lending margins offset sluggish underlying growth and lingering credit strain. By our math, stripping out last November's bank purchase leaves loan growth from businesses owned a year ago at 2.4% and deposit growth at 2.0%. One caution: customer deposits and business sweep accounts both shrank from last quarter as the bank trimmed deposit rates.
The question now is whether BancFirst can keep its lending margin at 3.85% without losing more customer deposits or taking losses on its problem commercial loan. Either the October purchase of Spirit Bank replenishes low-cost funding while the bad loan resolves, or deposit outflows force the bank to pay up for cash. Fourth-quarter deposit balances and nonaccrual loan totals will tell.
🐂 Bull Case
Lower Deposit Rates Lifted Lending Margins
BancFirst, an Oklahoma and Texas banking group, makes most of its money on the spread between loan interest and deposit costs. Net interest margin, which measures that spread as a share of earning assets, rose to 3.85% from 3.79% a year ago.
- Net interest income: $136.0 million, up 8.3% from a year ago
- Money market and interest-bearing checking rate: 2.58%, down from 3.04% a year ago
- Time deposit rate: 3.57%, down from 4.05% a year ago
- Average loan yield: 6.87%, compared with 6.89% last quarter and 6.98% a year ago
This matters because the bank cut what it pays depositors faster than borrowers' loan rates came down. That wider spread combined with "Higher loan volume and general growth in earning assets" to lift pre-tax profit margin by 0.9 percentage points from a year ago.
What to watch: the average rate paid on money market accounts in the fourth-quarter report. A further drop would show the bank can still trim funding costs even if the Federal Reserve pauses rate cuts.
Acquisitions Carried Over Half of Loan Growth
BancFirst grows both by writing new loans at its branches and by buying smaller community banks in Oklahoma and Texas. Total loans reached $8.73 billion, up $445.4 million or 5.4% from a year ago, which management cited as the primary driver of interest income growth.
That headline figure includes American Bank of Oklahoma, which the group bought in November 2025 with $244 million in loans. Stripping out those acquired balances at close, loans from businesses owned a year ago grew 2.4%, or $201.4 million, by our math. The pending purchase of Spirit Bank in October will add another layer of acquired balances next quarter.
What to watch: total loans added in the fourth quarter alongside the Spirit Bank closing disclosure. Separating Spirit Bank's starting loan book will show whether underlying lending is picking up from this quarter's $77.3 million pace.
Higher Dividend and Rising Tangible Book Value
BancFirst continues to build capital on its balance sheet while returning more cash to shareholders. Stockholders' equity rose to $2.00 billion, pushing tangible book value per share (net worth per share excluding goodwill and other intangible assets) up 11.9% from a year ago to $53.40.
The board raised the quarterly cash dividend by 6.1% to $0.52 per share, up from $0.49 in the prior four quarters. Even after paying that higher dividend, average equity rose to 13.14% of average assets from 12.38% a year ago, giving the lender extra cushion to absorb the Spirit Bank purchase for cash or stock.
What to watch: goodwill and intangible assets in the fourth-quarter balance sheet. The change will show how much of this capital cushion the company spent to close the Spirit Bank deal.
🐻 Bear Case
Nonaccrual Loans Stay High After a Commercial Default
"Asset quality metrics are stable and charge-offs remain in line with historical levels," chief executive David Harlow said. Nonaccrual loans are loans where the borrower has stopped making scheduled interest payments, and the bank's credit figures show more strain than Harlow's summary suggests.
- Nonaccrual loans: $75.6 million (0.87% of total loans), up from $57.3 million (0.69%) a year ago
- Allowance coverage of nonaccrual loans: 141.6%, down from 173.8% a year ago
- Other real estate owned and repossessed assets: $60.3 million, up 13.3% from a year ago
- Net charge-offs (loans written off as uncollectible): $4.0 million, or $2.2 million excluding acquired problem loans by our math, vs $1.7 million a year ago
The company said "one commercial loan was the primary driver of the nonaccrual loans balance" after jumping in the second quarter. Even with $1.8 million of loan write-offs tied to previously reserved acquisition loans, underlying write-offs rose and the reserve cushion over bad loans is thinner than last year.
What to watch: nonaccrual loans and repossessed real estate in the fourth quarter. A drop would show the bank resolved the large commercial loan without taking a major loss.
Customer Deposits and Sweep Balances Shrank
A bank relies on customer deposits and sweep accounts (cash that business customers move into overnight investment accounts) for low-cost funding. Total deposits fell by $126.6 million from last quarter to $12.70 billion, with noninterest-bearing checking accounts dropping $112.4 million.
From a year ago, headline deposits rose 4.8%, but stripping out the $341 million acquired with American Bank of Oklahoma leaves underlying growth of 2.0% by our math. Meanwhile, off-balance-sheet sweep accounts fell to $4.7 billion, down $282.5 million since year-end and down about $300 million from June, showing business clients pulled cash as the bank lowered deposit rates.
What to watch: noninterest-bearing demand deposits in the fourth quarter, excluding Spirit Bank's balance at close. Continued outflows would force BancFirst to raise deposit rates or shrink its cash reserves.
👓 Other Themes
High Interest Rates May Slow Regional Demand
Harlow noted that customer pipelines look good, but warned that "we expect higher interest rates and a higher-for-longer rate outlook to have a dampening effect on future economic activity." To keep expanding in a slower market, the company is relying on acquisitions, and Harlow confirmed that "Our previously announced acquisition of Tulsa-based Spirit Bank is on schedule to close in October."
💲 Other KPIs
The efficiency ratio — noninterest expense as a share of total revenue — held nearly unchanged from 52.47% a year ago and 52.02% last quarter. Salaries and employee benefits rose 7.2% from a year ago to $61.8 million, or 33.0% of total revenue (up 0.1 percentage points by our math), while property write-downs stayed low after a fourth-quarter spike.
Fee income grew 3.0% from a year ago, slowing from 12.3% growth in the second quarter because last quarter included a $2.9 million life insurance gain. Deposit service charges rose 6.5% from a year ago to $19.3 million and cash management fees grew 5.8% to $10.9 million, offsetting a 3.1% dip in insurance commissions.
Average diluted shares rose 0.7% from a year ago and 0.1% from the second quarter. The slight increase reflects stock issued during the November 2025 purchase of American Bank of Oklahoma and employee stock compensation, which kept per-share profit growth of 6.5% slightly below net income growth of 7.3%.
🔮 Guidance
Unchanged. The group confirmed that the purchase of Tulsa-based Spirit Bank will close in October, matching its second-quarter statement calling for a fourth-quarter completion. The deal adds branches in the Tulsa, Bristow and Sapulpa communities.
❓ Key Questions
What is the status of the single large nonaccrual commercial loan?
Nonaccrual loans remain elevated at $75.6 million, or 0.87% of total loans, driven by one commercial borrower that defaulted in the second quarter. Investors need to know the industry, collateral value, and timeline for resolving this credit.
How much in loans and deposits will Spirit Bank add at close?
When BancFirst bought American Bank of Oklahoma, it disclosed $244 million in loans and $341 million in deposits at closing. Management has not yet shared the balance sheet size or purchase price for Spirit Bank closing in October.
Why did off-balance-sheet sweep accounts drop by $300 million this quarter?
Sweep accounts fell from $5.0 billion in June to $4.7 billion in September alongside a $126.6 million drop in on-balance-sheet deposits. Management did not say whether this reflects seasonal tax and municipal outflows or customers moving cash to higher-yielding competitors.
How much more can deposit rates fall without losing checking balances?
BancFirst cut its money market rate by 46 basis points over the past year to 2.58%, lifting its lending margin. With noninterest-bearing demand deposits falling 2.7% this quarter, the bank may be nearing the floor on deposit pricing.