BANCFIRST CORP /OK/ - Quarter Report: 2008 June (Form 10-Q)

Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2008

¨	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 check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨

Indicated by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 31, 2008 there were 15,204,786 shares of the registrant’s Common Stock outstanding.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share data)


	June 30,						December 31, 2007
	2008			2007			December 31, 2007
ASSETS
Cash and due from banks	$	162,045		$	139,858		$	194,103
Interest-bearing deposits with banks		5,325			2,343			2,387
Federal funds sold		400,000			461,000			399,000
Securities (market value: $448,568, $459,130, and $467,921, respectively)		448,350			459,271			467,719
Loans:
Total loans (net of unearned interest)		2,608,913			2,345,838			2,487,099
Allowance for loan losses		(33,512	)		(27,568	)		(29,127	)

Loans, net		2,575,401			2,318,270			2,457,972
Premises and equipment, net		89,483			85,012			88,110
Other real estate owned		1,975			926			1,300
Intangible assets, net		7,649			8,560			8,099
Goodwill		34,327			34,285			34,327
Accrued interest receivable		25,670			26,354			26,093
Other assets		89,606			65,987			63,896

Total assets	$	3,839,831		$	3,601,866		$	3,743,006

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	1,016,882		$	915,057		$	966,214
Interest-bearing		2,350,497			2,236,496			2,322,290

Total deposits		3,367,379			3,151,553			3,288,504
Short-term borrowings		14,366			35,858			30,400
Accrued interest payable		6,759			7,562			7,831
Other liabilities		37,243			14,478			16,899
Long-term borrowings		99			1,064			606
Junior subordinated debentures		26,804			26,804			26,804

Total liabilities		3,452,650			3,237,319			3,371,044

Commitments and contingent liabilities
Stockholders’ equity:
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued		—			—			—
Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued		—			—			—
Common stock, $1.00 par, 20,000,000 shares authorized; shares issued and outstanding: 15,186,632, 15,724,536 and 15,217,230, respectively		15,187			15,725			15,217
Capital surplus		64,672			62,291			63,917
Retained earnings		303,542			287,515			285,879
Accumulated other comprehensive income (loss), net of income tax of $(2,036), $530 and $(3,742), respectively		3,780			(984	)		6,949

Total stockholders’ equity		387,181			364,547			371,962

Total liabilities and stockholders’ equity	$	3,839,831		$	3,601,866		$	3,743,006

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
INTEREST INCOME
Loans, including fees	$	42,507		$	47,216		$	87,671		$	93,731
Securities:
Taxable		4,133			4,688			8,690			9,088
Tax-exempt		319			344			658			705
Federal funds sold		2,208			6,039			5,348			10,864
Interest-bearing deposits with banks		32			29			76			65

Total interest income		49,199			58,316			102,443			114,453

INTEREST EXPENSE
Deposits		13,807			19,817			30,982			38,497
Short-term borrowings		124			551			308			949
Long-term borrowings		2			19			9			39
Junior subordinated debentures		492			492			983			1,157

Total interest expense		14,425			20,879			32,282			40,642

Net interest income		34,774			37,437			70,161			73,811
Provision for loan losses		3,539			132			5,319			101

Net interest income after provision for loan losses		31,235			37,305			64,842			73,710

NONINTEREST INCOME
Trust revenue		1,436			1,413			2,864			2,871
Service charges on deposits		8,376			7,432			15,895			14,042
Securities transactions		6,121			339			6,149			566
Income from sales of loans		483			480			1,052			1,220
Insurance commissions and premiums		1,629			1,703			3,530			2,942
Cash management services		2,589			2,300			5,122			4,444
Gain on sale of other assets		1,189			10			3,011			17
Other		1,507			1,558			2,948			3,015

Total noninterest income		23,330			15,235			40,571			29,117

NONINTEREST EXPENSE
Salaries and employee benefits		20,366			18,937			40,555			37,727
Occupancy and fixed assets expense, net		2,119			2,047			4,195			4,125
Depreciation		1,903			1,761			3,658			3,570
Amortization of intangible assets		224			255			449			507
Data processing services		758			655			1,494			1,319
Net expense from other real estate owned		(8	)		104			(16	)		15
Marketing and business promotion		1,571			1,578			2,850			3,159
Early extinguishment of debt		—			—			—			1,894
Other		6,663			6,281			13,339			12,723

Total noninterest expense		33,596			31,618			66,524			65,039

Income before taxes		20,969			20,922			38,889			37,788
Income tax expense		(7,232	)		(7,520	)		(13,558	)		(13,263	)

Net income		13,737			13,402			25,331			24,525
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities		(14,059	)		(2,149	)		(7,166	)		(1,452	)
Reclassification adjustment for gains (losses) included in net income		3,979			220			3,997			368

Comprehensive income	$	3,657		$	11,473		$	22,162		$	23,441

NET INCOME PER COMMON SHARE
Basic	$	0.91		$	0.85		$	1.67		$	1.56

Diluted	$	0.89		$	0.83		$	1.63		$	1.52

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

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
COMMON STOCK
Issued at beginning of period	$	15,183		$	15,722		$	15,217		$	15,764
Shares issued		4			3			10			14
Shares acquired and canceled		—			—			(40	)		(53	)

Issued at end of period	$	15,187		$	15,725		$	15,187		$	15,725

CAPITAL SURPLUS
Balance at beginning of period	$	64,297		$	61,868		$	63,917		$	61,418
Common stock issued		375			423			755			873

Balance at end of period	$	64,672		$	62,291		$	64,672		$	62,291

RETAINED EARNINGS
Balance at beginning of period	$	292,837		$	276,943		$	285,879		$	271,073
Net income		13,737			13,402			25,331			24,525
Dividends on common stock		(3,032	)		(2,830	)		(6,075	)		(5,670	)
Common stock acquired and canceled		—			—			(1,593	)		(2,413	)

Balance at end of period	$	303,542		$	287,515		$	303,542		$	287,515

ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized gains on securities:
Balance at beginning of period	$	13,860		$	945		$	6,949		$	100
Net change		(10,080	)		(1,929	)		(3,169	)		(1,084	)

Balance at end of period	$	3,780		$	(984	)	$	3,780		$	(984	)

Total stockholders’ equity	$	387,181		$	364,547		$	387,181		$	364,547

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

BANCFIRST CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(Dollars in thousands)


	Six Months Ended June 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES	$	20,556		$	29,506

INVESTING ACTIVITIES
Net cash and due from banks used for acquisitions and dispositions		—			(3,991	)
Purchases of securities:
Held for investment		(2,445	)		(3,773	)
Available for sale		(136,666	)		(80,168	)
Maturities of securities:
Held for investment		3,150			4,705
Available for sale		67,598			49,569
Proceeds from sales and calls of securities:
Held for investment		38			614
Available for sale		88,502			966
Net increase in federal funds sold		(1,000	)		(126,000	)
Purchase of life insurance		—			(15,000	)
Purchases of loans		(12,290	)		(2,606	)
Proceeds from sales of loans		21,459			28,998
Net other increase in loans		(132,473	)		(48,017	)
Purchases of premises, equipment and other		(5,664	)		(7,062	)
Proceeds from the sale of other real estate owned, repossessed assets and other		4,724			4,067

Net cash used in investing activities		(105,067	)		(197,698	)

FINANCING ACTIVITIES
Net increase in demand, transaction and savings deposits		45,807			148,554
Net increase in certificates of deposits		33,068			28,694
Net increase (decrease) in short-term borrowings		(16,034	)		12,606
Net decrease in long-term borrowings		(507	)		(275	)
Prepayment of junior subordinated debentures		—			(26,894	)
Issuance of common stock		765			887
Acquisition of common stock		(1,633	)		(2,466	)
Cash dividends paid		(6,075	)		(5,670	)

Net cash provided by financing activities		55,391			155,436

Net decrease in cash and due from banks		(29,120	)		(12,756	)
Cash and due from banks at the beginning of the period		196,490			154,957

Cash and due from banks at the end of the period	$	167,370		$	142,201

SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest	$	33,534		$	41,068

Cash paid during the period for income taxes	$	11,300		$	11,951

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

BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)

GENERAL

The accompanying consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, Wilcox, Jones & McGrath, Inc., and BancFirst and its subsidiaries (the “Company”). The operating subsidiaries of BancFirst are Council Oak Investment Corporation, BancFirst Agency, Inc., Lenders Collection Corporation, BancFirst Community Development Corporation and Council Oak Real Estate, Inc. 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. Certain amounts for 2007 have been reclassified to conform to the 2008 presentation.

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, 2007, the date of the most recent annual report.

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)

RECENT ACCOUNTING PRONOUNCEMENTS

FAS No. 162 (“FAS 162”), “The Hierarchy of Generally Accepted Accounting Principles” identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The hierarchical guidance provided by FAS 162 will be effective 60 days following the Securities Exchange Commission’s approval of the Public Company Accounting Oversight Board’s amendment to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The implementation of FAS 162 is not expected to have a significant impact on the Company’s financial statements.

FAS No. 161 (“FAS 161”), “Disclosures About Derivative Instruments and Hedging Activities, and Amendment of FASB Statement No. 133” amends FAS 133, “Accounting for Derivative Instruments and Hedging Activities,” to amend and expand the disclosure requirements of FAS 133 to provide greater transparency about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedge items are accounted for under FAS 133 and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. To meet those objectives, FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for the Company on January 1, 2009 and is not expected to have a significant impact on the Company’s financial statements.

FAS No. 157, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements (see Note 14 – Fair Value Measurements).

In February 2007, the FASB issued FAS No. 159 (“FAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115.” FAS 159 allows entities to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and financial liabilities that are not otherwise required to be measured at fair value, with changes in fair value recognized in earnings as they

occur. FAS 159 also requires entities to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of similar assets and liabilities measured using another measurement attribute on the face of the statement of financial position. Lastly, FAS 159 establishes presentation and disclosure requirements designed to improve comparability between entities that elect different measurement attributes for similar assets and liabilities. FAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted if an entity also early adopts the provisions of FAS 157. The Company has determined that it does not intend to elect to use the fair value option to value financial assets and liabilities in accordance with FAS 159.

In December 2007, the FASB issued FAS No. 141R, “Business Combinations” (“FAS 141R”), which establishes principles and requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. This statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. FAS 141R applies prospectively to business combinations for which the acquisition date is on or after fiscal years beginning after December 15, 2008. FAS 141R will become effective for our fiscal year beginning January 1, 2009. The Company will evaluate the effect that the adoption of FAS 141R will have on future acquisitions.

(3)

RECENT DEVELOPMENTS: MERGERS, ACQUISITIONS AND DISPOSALS

In November 2006, the Company announced its intent to exercise the optional prepayment terms of its 9.65% Junior Subordinated Debentures. The securities were redeemed effective January 15, 2007 for a redemption price equal to 104.825% of the aggregate $25 million liquidation amount of the trust securities plus all accrued and unpaid interest to the redemption date. As a result of the prepayment, the Company incurred a loss of approximately, $1.9 million or $1.2 million after taxes in the first quarter of 2007. The loss reflects the premium paid and the acceleration of the unamortized issuance costs.

During the first quarter of 2007 the Company entered into an agreement to acquire Armor Assurance Company (Armor), an insurance agency in Muskogee, Oklahoma for cash of approximately $3.3 million and a $372,000 note payable in three equal annual installments. The transaction was consummated in April 2007. Armor had total assets of approximately $364,000. As a result of the acquisition, Armor was merged with the Company’s existing property casualty agency, Wilcox & Jones, to form Wilcox, Jones & McGrath, Inc. 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 acquisition forward. The acquisition did not have a material effect on the results of operations of the Company for 2007 or the first six months of 2008.

In September 2007, the Company completed a modified Dutch Auction self-tender offer and purchased 539,453 shares of its common stock for the maximum offer price of $45.00 per share. Cash on hand was used to pay for the purchase of the stock.

In March 2008, the Company, as a member bank of Visa, recorded a $1.8 million pre-tax gain from the mandatory partial redemption of the Company’s Visa shares received in the first quarter initial public offering. The gain was included in gain on sale of other assets.

In April 2008, the Company completed an $80 million sale of securities resulting in a securities pre-tax gain of $6.1 million. The transaction resulted in the sale of $80 million of US Treasury securities and the purchase of Government Sponsored Enterprises (GSE) senior debt securities of similar amounts and maturities. The after-tax impact of these transactions was approximately $3.8 million for the second quarter and $3.3 million for the year.

(4)

SECURITIES

The table below summarizes securities held for investment and securities available for sale (dollars in thousands).


	June 30,				December 31, 2007
	2008		2007		December 31, 2007
Held for investment, at cost (market value; $24,744, $24,696 and $25,472, respectively)	$	24,526	$	24,837	$	25,270
Available for sale, at market value		423,824		434,434		442,449

Total	$	448,350	$	459,271	$	467,719

The table below summarizes the maturity of securities (dollars in thousands).


	June 30,				December 31, 2007
	2008		2007		December 31, 2007
Contractual maturity of debt securities:
Within one year	$	123,999	$	120,713	$	174,544
After one year but within five years		280,579		256,206		222,322
After five years		28,814		68,574		56,871

Total debt securities		433,392		445,493		453,737
Equity securities		14,958		13,778		13,982

Total	$	448,350	$	459,271	$	467,719

The Company held 209, 133 and 230 debt securities available for sale that had unrealized gains as of June 30, 2008 and 2007 and December 31, 2007, respectively. These securities had a market value totaling $281.8 million, $69.9 million and $270.6 million, respectively, and unrealized gains totaling $4.8 million, $299,000 and $8.4 million, respectively. The Company also held 62, 185 and 74 debt securities available for sale that had unrealized losses, respectively. These securities had a market value totaling $128.5 million, $327.5 million and $160.1 million and unrealized losses totaling $2.1 million, $5.4 million and $699,000, respectively. 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 debt securities until the unrealized losses are recovered.

(5)

LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category (dollars in thousands):


	June 30,								December 31, 2007
	2008				2007				December 31, 2007
	Amount		Percent		Amount		Percent		Amount		Percent
Commercial and industrial	$	520,868	19.97	%	$	447,817	19.09	%	$	493,860	19.86	%
Oil & gas production & equipment		90,739	3.48			85,975	3.67			92,759	3.73
Agriculture		77,980	2.99			73,834	3.15			87,035	3.50
State and political subdivisions:
Taxable		5,776	0.22			5,384	0.23			5,972	0.24
Tax-exempt		8,490	0.33			9,135	0.39			8,937	0.36
Real Estate:
Construction		235,909	9.04			206,743	8.81			222,820	8.96
Farmland		90,197	3.46			86,380	3.68			95,137	3.82
One to four family residences		530,413	20.33			514,428	21.93			513,969	20.67
Multifamily residential properties		37,707	1.45			17,755	0.76			20,248	0.81
Commercial		706,539	27.08			618,812	26.38			653,066	26.26
Consumer		284,949	10.92			255,500	10.89			270,735	10.89
Other		19,346	0.73			24,075	1.02			22,561	0.90

Total loans	$	2,608,913	100.00	%	$	2,345,838	100.00	%	$	2,487,099	100.00	%

Loans held for sale (included above)	$	9,721			$	10,340			$	8,320

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, if any, 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 (dollars in thousands):


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Balance at beginning of period	$	30,193		$	27,493		$	29,127		$	27,700

Charge-offs		(355	)		(226	)		(1,254	)		(714	)
Recoveries		135			169			320			481

Net charge-offs		(220	)		(57	)		(934	)		(233	)

Provisions charged to operations		3,539			132			5,319			101

Balance at end of period	$	33,512		$	27,568		$	33,512		$	27,568

The net charge-offs (recoveries) by category are summarized as follows (dollars in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008		2007
Commercial, financial and other	$	12	$	(39	)	$	44	$	(50	)
Real estate – construction		3		(1	)		11		(24	)
Real estate – mortgage		93		19			606		9
Consumer		112		78			273		298

Total	$	220	$	57		$	934	$	233

(6)

NONPERFORMING AND RESTRUCTURED ASSETS

Below is a summary of nonperforming and restructured assets (dollars in thousands):


	June 30,						December 31, 2007
	2008			2007			December 31, 2007
Past due over 90 days and still accruing	$	2,043		$	1,276		$	823
Nonaccrual		11,070			13,372			11,568
Restructured		833			912			1,121

Total nonperforming and restructured loans		13,946			15,560			13,512
Other real estate owned and repossessed assets		2,311			1,098			1,568

Total nonperforming and restructured assets	$	16,257		$	16,658		$	15,080

Nonperforming and restructured loans to total loans		0.53	%		0.66	%		0.54	%

Nonperforming and restructured assets to total assets		0.42	%		0.46	%		0.40	%

(7)

INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets (dollars in thousands):


	June 30,										December 31, 2007
	2008					2007					December 31, 2007
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Core deposit intangibles	$	6,722	$	(2,550	)	$	7,280	$	(2,424	)	$	6,722	$	(2,213	)
Customer relationship intangibles		4,081		(604	)		4,081		(377	)		4,081		(491	)

Total	$	10,803	$	(3,154	)	$	11,361	$	(2,801	)	$	10,803	$	(2,704	)

Amortization of intangible assets and estimated amortization of intangible assets are as follows (dollars in thousands):


Amortization:
Three months ended June 30, 2008	$	224
Three months ended June 30, 2007		255
Six months ended June 30, 2008		449
Six months ended June 30, 2007		507
Year ended December 31, 2007		968

Estimated Amortization
Year ending December 31:
2008	$	908
2009		908
2010		908
2011		908
2012		908

The following is a summary of goodwill by business segment (dollars in thousands):


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support		Elimin- ations		Consol- idated
Three Months Ended
June 30, 2008
Balance at beginning and end of period	$	6,150	$	23,295	$	4,258	$	624	$	—	$	34,327

June 30, 2007
Balance at beginning of period	$	6,150	$	23,253	$	2,485	$	624		—	$	32,512
Acquisitions		—		—		1,773		—		—		1,773

Balance at end of period	$	6,150	$	23,253	$	4,258	$	624		—	$	34,285

Six Months Ended
June 30, 2008
Balance at beginning and end of period	$	6,150	$	23,295	$	4,258	$	624	$	—	$	34,327

June 30, 2007
Balance at beginning of period	$	6,150	$	23,253	$	2,485	$	624		—	$	32,512
Acquisitions		—		—		1,773		—		—		1,773

Balance at end of period	$	6,150	$	23,253	$	4,258	$	624		—	$	34,285

Year Ended
December 31, 2007
Balance at beginning of period	$	6,150	$	23,253	$	2,485	$	624	$	—	$	32,512
Acquisitions		—		—		1,773		—		—		1,773
Adjustments		—		42		—		—		—		42

Balance at end of period	$	6,150	$	23,295	$	4,258	$	624	$	—	$	34,327

(8)

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 financial statements. The required minimums and the Company’s respective ratios are shown below (dollars in thousands).


	Minimum Required		June 30,						December 31, 2007
	Minimum Required		2008			2007			December 31, 2007
Tier 1 capital			$	367,399		$	348,663		$	348,564
Total capital			$	402,040		$	377,602		$	378,755
Risk-adjusted assets			$	2,992,477		$	2,690,441		$	2,826,072
Leverage ratio	3.00	%		9.67	%		9.80	%		9.42	%
Tier 1 capital ratio	4.00	%		12.28	%		12.96	%		12.33	%
Total capital ratio	8.00	%		13.44	%		14.03	%		13.40	%

As of June 30, 2008 and 2007, and December 31, 2007, BancFirst was considered to be “well capitalized”. There are no conditions or events since the most recent notification of BancFirst’s capital category that management believes would change its category.

(9)

STOCK REPURCHASE PLAN

In November 1999, the Company adopted a new Stock Repurchase Program (the “SRP”) authorizing management to repurchase up to 600,000 shares of the Company’s common stock. The SRP was amended in May 2001, August 2002, and September 2007 to increase the shares authorized to be purchased by 555,832 shares, 364,530 shares and 366,948 shares, respectively. 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 approved by the Company’s Executive Committee. At June 30, 2008 there were 560,000 shares remaining that could be repurchased under the SRP. Below is a summary of the shares repurchased under the program.


	Three Months Ended June 30,		Six Months Ended June 30,
	2008	2007	2008		2007
Number of shares repurchased	—	—		40,000		53,000
Average price of shares repurchased	—	—	$	40.70	$	46.47

(10)

SHARE-BASED COMPENSATION

BancFirst Corporation adopted a nonqualified incentive stock option plan (the “BancFirst ISOP”) in May 1986. In May 2006, the Company amended the BancFirst ISOP to increase the number of shares to be issued under the plan to 2,500,000 shares. At June 30, 2008, 83,410 shares are available for future grants. The BancFirst ISOP will terminate December 31, 2011. The options are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options granted prior to 1996 expire at the end of eleven years from the date of the grant. Options granted after January 1, 1996 expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2008 will become exercisable through the year 2015. The option price must be no less than 100% of the fair market value of the stock relating to such option at the date of grant.

In June 1999, the Company adopted the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “BancFirst Directors’ Stock Option Plan”). Each non-employee director is granted an option for 10,000 shares. In May 2006, the Company amended the BancFirst Directors’ Stock Option Plan to increase the number of shares to be issued under the plan to 180,000 shares. At June 30, 2008, 25,000 shares are available for future grants. The options are

exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire at the end of fifteen years from the date of grant. Options outstanding as of June 30, 2008 will become exercisable through the year 2012. The option price must be no less than 100% of the fair value of the stock relating to such option at the date of grant.

Below is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan (dollars in thousands, except per share data):


	Six Months Ended June 30, 2008
	Options		Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2008	1,203,817		$	26.75
Options granted	10,000			45.39
Options exercised	(9,000	)		17.88

Outstanding at June 30, 2008	1,204,817			26.97	9.21	$	19,075

Exercisable at June 30, 2008	650,239			18.02	7.38	$	15,861

Below is additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan (dollars in thousands, except per share data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Weighted average grant-date fair value per share of options granted	$	19.62	$	16.50	$	20.24	$	17.57
Total intrinsic value of options exercised		75		42		239		388
Cash received from options exercised		49		34		161		160
Tax benefit realized from options exercised		29		16		92		150

Effective January 1, 2006 the Company adopted, on a modified prospective basis, the fair value provisions of FAS 123R. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility, and the expected term. The fair value of each option is expensed over its vesting period.

For the three months ended June 30, 2008 and 2007, the Company recorded share-based employee compensation expense of approximately $192,000 and $199,000 respectively, net of tax and approximately $367,000 and $373,000 for the six months ended June 30, 2008 and 2007, respectively.

The Company will continue to amortize the remaining fair value of these stock options of approximately $3.6 million, net of tax, over the remaining vesting period of approximately seven years. Share-based employee compensation expense under the fair value method was measured using the following assumptions for the options granted:


	2008		2007
Risk-free interest rate	3.57	%	4.73	%
Dividend yield	1.50	%	1.50	%
Stock price volatility	38.68	%	25.85	%
Expected term	10 Yrs		10 Yrs

The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company’s stock. The expected term is estimated from the historical option exercise experience.

(11)

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 (dollars in thousands).


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Unrealized gain (loss) during the period:
Before-tax amount	$	(21,628	)	$	(3,307	)	$	(11,023	)	$	(2,234	)
Tax (expense) benefit		7,569			1,158			3,857			782

Net-of-tax amount	$	(14,059	)	$	(2,149	)	$	(7,166	)	$	(1,452	)

The amount of unrealized gain or loss included, net of tax, in accumulated other comprehensive income is summarized below (dollars in thousands).


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Unrealized gain (loss) on securities:
Beginning balance	$	13,860		$	945		$	6,949		$	100
Current period change		(14,059	)		(2,149	)		(7,166	)		(1,452	)
Reclassification adjustment for gains (losses) included in net income		3,979			220			3,997			368

Ending balance	$	3,780		$	(984	)	$	3,780		$	(984	)

(12)

NET INCOME PER COMMON SHARE

Basic and diluted net income per common share are calculated as follows (dollars in thousands, except per share data):


	Income (Numerator)		Shares (Denominator)	Per Share Amount
Three Months Ended June 30, 2008
Basic
Income available to common stockholders	$	13,737	15,185,763	$	0.91

Effect of stock options		—	362,924

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	13,737	15,548,687	$	0.89

Three Months Ended June 30, 2007
Basic
Income available to common stockholders	$	13,402	15,723,483	$	0.85

Effect of stock options		—	333,285

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	13,402	16,056,768	$	0.83

Six Months Ended June 30, 2008
Basic
Income available to common stockholders	$	25,331	15,196,906	$	1.67

Effect of stock options		—	359,067

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	25,331	15,555,973	$	1.63

Six Months Ended June 30, 2007
Basic
Income available to common stockholders	$	24,525	15,751,110	$	1.56

Effect of stock options		—	349,110

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	24,525	16,100,220	$	1.52

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 June 30, 2008	264,929	$	44.59
Three Months Ended June 30, 2007	237,016	$	46.20
Six Months Ended June 30, 2008	267,016	$	43.95
Six Months Ended June 30, 2007	208,276	$	46.18

(13)

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 (dollars in thousands):


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support			Elimin- ations			Consol- idated
Three Months Ended:
June 30, 2008
Net interest income (expense)	$	10,449	$	24,385	$	1,665	$	(1,725	)	$	—		$	34,774
Noninterest income		2,453		8,316		4,551		21,963			(13,953	)		23,330
Income before taxes		5,532		13,510		1,839		14,024			(13,936	)		20,969

June 30, 2007
Net interest income (expense)	$	11,583	$	24,207	$	2,094	$	(432	)	$	(15	)	$	37,437
Noninterest income		2,115		7,622		4,739		14,910			(14,151	)		15,235
Income before taxes		7,543		15,377		3,007		9,179			(14,184	)		20,922

Six Months Ended:
June 30, 2008
Net interest income (expense)	$	21,305	$	47,852	$	3,370	$	(2,366	)	$	—		$	70,161
Noninterest income		4,713		16,071		9,291		36,466			(25,970	)		40,571
Income before taxes		12,262		26,442		3,758		22,340			(25,913	)		38,889

June 30, 2007
Net interest income (expense)	$	22,731	$	47,703	$	4,002	$	(596	)	$	(29	)	$	73,811
Noninterest income		4,006		14,557		9,143		28,678			(27,267	)		29,117
Income before taxes		14,527		29,802		5,609		15,114			(27,264	)		37,788

Total Assets:
June 30, 2008	$	1,225,138	$	2,422,997	$	154,266	$	504,536		$	(467,106	)	$	3,839,831
June 30, 2007	$	1,126,799	$	2,290,303	$	156,130	$	468,299		$	(439,665	)	$	3,601,866
December 31, 2007	$	1,123,148	$	2,390,420	$	206,060	$	478,823		$	(455,445	)	$	3,743,006

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.

(14)

FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted the provisions of FAS No. 157 (“FAS 157”), “Fair Value Measurements,” for financial assets and financial liabilities. In accordance with Financial Accounting Standards Board Staff Positions (FSP) No. 157-2, Effective Date of FASB Statement No. 157,” the Company will delay application of FAS 157 for non-financial assets and non-financial liabilities, until January 1, 2009. FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.

FAS 157 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1

Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3

Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value effective January 1, 2008.

Securities Available for Sale

U.S. Treasury Bills are reported at fair value utilizing Level 1 inputs. Other securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value information from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Company also invests in equity securities classified as available for sale for which observable information is not readily available. These securities are reported at fair value utilizing Level 3 inputs. For these securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors.

Derivatives

Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer quotations to value its oil and gas swaps/options. The Company utilizes internal valuation models with observable market data inputs to estimate fair values.

Loans Held For Sale

The Company originates mortgage loans to be sold in the secondary market. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including 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 45 days of origination and gains or losses recognized upon the sale of the loans are determined on a specific identification basis.

Impaired Loans

Certain impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 3 inputs based on customized discounting criteria and are considered in the calculation of the allowance for loan loss reserves.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2008, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):


	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
Securities Available for Sale	$	—	$	414,668	$	9,156	$	423,824
Derivative Assets		—		20,505		—		20,505
Derivative Liabilities		—		20,011		—		20,011
Loans Held For Sale		—		9,721		—		9,721

(15)

DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, the Company simultaneously enters into an offsetting contract with a counterparty to mitigate the exposure to fluctuations in oil and gas prices.

The Company obtains dealer quotations to value its oil and gas derivative positions. The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table (notional amounts and dollars in thousands):


		June 30, 2008					June 30, 2007					December 31, 2007
	Notional Units	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Oil and gas swaps and options

Oil
Customer	Barrels	(128	)	$	9,203		—		$	—		(148	)	$	2,410
Counterparty	Barrels	128			(9,028	)	—			—		148			(2,362	)

Natural Gas
Customer	MMBTUs	(3,480	)		11,303		(2,040	)		(587	)	(2,570	)		(662	)
Counterparty	MMBTUs	3,480			(10,983	)	2,040			671		2,570			789

The Company’s credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Changes in the Company’s credit exposure will be offset by equal and opposite changes in the hedged position. The net positive fair value of the contracts is the profit derived from the activity and is unaffected by market price movements.

Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor’s) and monitoring market information.

The Company had credit exposure relating to oil and gas swaps and options with bank customers of approximately $20.5 million at June 30, 2008 and $1.7 million at December 31, 2007. Conversely, the Company had exposure to bank counterparties of approximately $700,000 at June 30, 2007.

The Company entered into a $30 million five year guaranty with a counterparty on June 4, 2008 for the timely payment of the obligations of the subsidiary Bank related to the settlement of oil and gas positions.

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 second quarter of 2008 was $13.7 million compared to $13.4 million for the second quarter of 2007. Diluted net income per share was $0.89 and $0.83 for the second quarter of 2008 and 2007, respectively. For the first six months of 2008, net income was $25.3 million, compared to $24.5 million for the first six months of 2007. Diluted net income per share for the first six months of 2008 was $1.63 compared to $1.52 for the first six months of 2007.

Total assets at June 30, 2008 were $3.8 billion, up $96.8 million from December 31, 2007 and up $238.0 million from a year ago. Total loans increased to $2.61 billion, up $121.8 million from December 31, 2007 and up $263.1 million from June 30, 2007. Total deposits were $3.4 billion, up $78.9 million from December 31, 2007 and up $215.8 million from June 30, 2007. Stockholders’ equity was $387 million at June 30, 2008, up $15.2 million from December 31, 2007 and up $22.6 million compared to June 30, 2007. The Company’s liquidity remains strong as its average loan to deposit ratio was 77.2% at quarter end and core deposits represented 91.2% of total deposits. The Company had no brokered deposits and less than $100,000 of Federal Home Loan Bank borrowings. Stockholder’s equity was $387 million at June 30, 2008 which was 10.2% of total assets.

In April 2008, the Company completed an $80 million sale of securities resulting in a securities pre-tax gain of $6.1 million. The transaction resulted in the sale of $80 million of US Treasury securities and the purchase of Government Sponsored Enterprises (GSE) senior debt securities of similar amounts and maturities. The after-tax impact of these transactions was approximately $3.8 million or $0.24 per diluted earnings per share for the second quarter, and $3.3 million or $0.21 per diluted earnings per share for the year.

In November 2006, the Company announced its intent to exercise the optional prepayment terms of its 9.65% Junior Subordinated Debentures. The securities were redeemed effective January 15, 2007 for a redemption price equal to 104.825% of the aggregate $25 million liquidation amount of the trust securities plus all accrued and unpaid interest to the redemption date. As a result of the prepayment, the Company incurred a loss of approximately $1.2 million after taxes in the first quarter of 2007. The loss reflects the premium paid and the acceleration of the unamortized issuance costs.

RESULTS OF OPERATIONS

Second Quarter

Net interest income totaled $34.8 million, a decrease of $2.6 million, or 7.0%, compared to the second quarter of 2007. The Company’s net interest margin (on a taxable equivalent basis) was 4.08% compared to 4.68% for the same period a year ago. The lower interest rate environment in 2008 compared to the first six months of 2007 as a result of Federal Reserve rate cuts has caused the Company’s net interest margin to decline.

The Company’s provision for loan losses was $3.5 million compared to $132,000 during the same period a year ago. The loan provision was driven primarily by the identification of a small number of commercial credits that were internally downgraded by management and to a lesser extent from the growth in the loan portfolio. Net loan charge-offs were $220,000 for the second quarter of 2008, compared to $57,000 for the second quarter of 2007. The net charge-offs represent a rate of 0.03% of average total loans for the second quarter of 2008 compared to 0.01% for the same period in 2007.

During the second quarter, the Company completed an $80 million sale of securities that resulted in a pre-tax securities gain of $6.1 million and also recognized a $1.2 million pre-tax gain on the sale of an asset which were included in noninterest income. Recurring operating noninterest income was $16.0 million compared to $15.2 million for the same period a year ago, an increase of 5.3% due to growth in deposit accounts, and cash management and treasury services. Noninterest expense totaled $33.6 million versus $31.6 million for the second quarter of 2007, an increase of $2 million, or 6.3%. The increase is due to the Company’s overall growth, including expansion of the Company’s insurance agency. The Company’s effective tax rate was 34.5% for the second quarter of 2008, compared to 35.9% for the second quarter of 2007. The decrease is a result of additional tax credits realized in 2008.

Year-To-Date

Net interest income for the six months ended June 30, 2008 was $70.2 million, a decrease of $3.7 million from the same period in 2007. The net interest margin in 2008 decreased to 4.16% from 4.72% for the first six months of 2007. The lower interest rate environment in 2008 compared to the first six months of 2007 as a result of Federal Reserve rate cuts has caused the Company’s net interest margin to decline.

The Company provided a $5.32 million provision for loan losses in the first six months of 2008, compared to $101,000 for the same period of 2007. The loan provision was driven primarily by the identification of a small number of commercial credits that were internally downgraded by management and to a lesser extent from the growth in the loan portfolio. Net loan charge-offs were $934,000 for the first six months of 2008, compared to $233,000 for the first six months of 2007. The net charge-offs represent an annualized rate of 0.07% of average total loans for the first six months of 2008 compared to 0.02% for the first six months of 2007.

Noninterest income for the six months of 2008 increased $11.5 million compared to the same period for 2007. Noninterest income during the first six months of 2008 included a one-time gain of approximately $1.8 million, before taxes, from the Company’s interest in the Visa initial public offering, a $6.1 million gain on the sale of securities, and a $1.2 million gain on the sale of an asset. Core noninterest income was up $2.4 million due to growth in deposit accounts, and cash management and treasury services. Noninterest expense increased $1.5 million compared to the first half of 2007. Last year’s expenses included a $1.9 million charge for the early redemption of the junior subordinated debentures. The increase in the core operating expenses over a year ago was attributable to the increase in salaries and benefits due to the Company’s growth, and expenses of an insurance agency acquired in the second quarter of 2007. Income tax expense increased $295,000 compared to the first six months of 2007. The effective tax rate on income before taxes was 34.9%, compared to 35.1% for the first six months of 2007. The decrease is a result of additional tax credits realized in 2008.

In recent months certain events in the national economy have caused credit and liquidity issues, declining home sales, rising oil and gas prices and a declining dollar resulting in an increase in credit losses at many U.S. banks. The deterioration in the economy has led to mixed reviews on whether or not the nation has entered into a recession. While the Oklahoma economy is currently performing better than the national average, it would be reasonable to expect that the state would eventually feel the impact of a national recession. If that were the case, it is reasonable to expect that loan losses of the Company would increase.

FINANCIAL POSITION

The aggregate of cash and due from banks, interest-bearing deposits with banks, and federal funds sold as of June 30, 2008 increased $277.0 million from December 31, 2007 but decreased $35.8 million from June 30, 2007. The increase from year-end was mainly from deposit growth in early 2008. The decrease from the previous year mainly resulted from a decrease in federal funds sold to help fund loan growth.

Total securities decreased $19.4 million compared to December 31, 2007 and $10.9 million compared to June 30, 2007. 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 $5.8 million at the end of the second quarter of 2008, compared to an unrealized gain of $10.7 million at December 31, 2007 and an unrealized gain of $2.1 million at June 30, 2007. The decrease in unrealized gains from year-end to June 30, 2008 was due in part to the realization of securities gains resulting from the $80 million sale of securities previously discussed. The average taxable equivalent yield on the securities portfolio for the second quarter of 2008 decreased to 4.15% from 4.76% for the same quarter of 2007.

Total loans increased $121.8 million from December 31, 2007 and increased $263.1 million from June 30, 2007. The increase compared to year end and second quarter 2007 was due to internal loan growth. The allowance for loan losses increased $4.4 million from year-end 2007 and $5.9 million from the second quarter of 2007. The allowance as a percentage of total loans was 1.28%, 1.17% and 1.18% at June 30, 2008, December 31, 2007 and June 30, 2007, respectively. The allowance to nonperforming and restructured loans at the same dates was 240.30%, 215.57% and 177.18%, respectively.

Nonperforming and restructured loans totaled $13.9 million at June 30, 2008, compared to $13.5 million at December 31, 2007 and $15.6 million at June 30, 2007. The ratio of nonperforming and restructured loans to total loans for the same periods was 0.53%, 0.54% and 0.66%, respectively. The level of nonperforming loans and loan losses may rise over time as a result of economic and credit cycles.

Total deposits increased $78.9 million compared to December 31, 2007, and $215.8 million compared to June 30, 2007 due to internal growth. The Company’s deposit base continues to be comprised substantially of core deposits, with large denomination certificates of deposit being only 10.0% of total deposits at June 30, 2008, compared to 9.2% at December 31, 2007 and 8.8% at June 30, 2007. Noninterest bearing deposits to total deposits were 30.2% at June 30, 2008, compared to 29.4% at December 31, 2007 and 29.0% at June 30, 2007.

Short-term borrowings decreased $16.0 million from December 31, 2007, and $21.5 million from June 30, 2007. Fluctuations in short-term borrowings are a function of federal funds purchased from correspondent banks, customer demand for repurchase agreements and liquidity needs of the bank.

Long-term borrowings decreased $507,000 from year-end 2007 and $965,000 from the second quarter of 2007. The decrease since the second quarter and year end of 2007 was due to scheduled principal payments and early payoff of the note payable related to the acquisition of Armor Assurance Company.

Stockholders’ equity was $387.2 million at June 30, 2008 which was an increase of $15.2 million from year-end 2007 and an increase of $22.6 million from the second quarter of 2007 due to accumulated earnings. Average stockholders’ equity to average assets for the second quarter of 2008 was 10.29%, compared to 10.14% for the second quarter of 2007. The Company’s leverage ratio and total risk-based capital ratio were 9.67% and 13.44%, respectively, at June 30, 2008, well in excess of the regulatory minimums.

FUTURE APPLICATION OF ACCOUNTING STANDARDS

See note (2) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

SEGMENT INFORMATION

See note (13) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.

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)

(Dollars in thousands, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Per Common Share Data
Net income – basic	$	0.91		$	0.85		$	1.67		$	1.56
Net income – diluted		0.89			0.83			1.63			1.52
Cash dividends		0.20			0.18			0.40			0.36
Performance Data
Return on average assets		1.46	%		1.51	%		1.36	%		1.41	%
Return on average stockholders’ equity		14.14			14.93			13.21			13.90
Cash dividend payout ratio		21.98			21.18			23.95			23.08
Net interest spread		3.37			3.62			3.36			3.67
Net interest margin		4.08			4.68			4.16			4.72
Efficiency ratio		57.82			60.03			60.08			63.19
Net charge-offs		0.03			0.01			0.07			0.02

				June 30,						December 31, 2007
				2008			2007			December 31, 2007
Balance Sheet Data
Book value per share				$	25.49		$	23.18		$	24.44
Tangible book value per share					22.73			20.46			21.66
Average loans to deposits (year-to-date)					77.05	%		76.23	%		76.04	%
Average earning assets to total assets (year-to-date)					91.09			90.75			90.86
Average stockholders’ equity to average assets (year-to-date)					10.29			10.14			10.18
Asset Quality Ratios
Nonperforming and restructured loans to total loans					0.53	%		0.66	%		0.54	%
Nonperforming and restructured assets to total assets					0.42			0.46			0.40
Allowance for loan losses to total loans					1.28			1.18			1.17
Allowance for loan losses to nonperforming and restructured loans					240.30			177.18			215.57

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSES

(Unaudited)

Taxable Equivalent Basis (Dollars in thousands)


	Three Months Ended June 30,
	2008							2007
	Average Balance			Interest Income/ Expense		Average Yield/ Rate		Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	2,552,864		$	42,587	6.69	%	$	2,333,455		$	47,302	8.13	%
Securities – taxable		414,047			4,132	4.00			400,811			4,688	4.69
Securities – taxable exempt		32,735			491	6.02			36,443			530	5.83
Federal funds sold		437,327			2,241	2.06			462,048			6,068	5.27

Total earning assets		3,436,973			49,451	5.77			3,232,757			58,588	7.27

Nonearning assets:
Cash and due from banks		143,999							144,695
Interest receivable and other assets		230,307							212,790
Allowance for loan losses		(30,740	)						(27,550	)

Total nonearning assets		343,566							329,935

Total assets	$	3,780,539						$	3,562,692

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	431,579		$	525	0.49	%	$	397,553		$	728	0.73	%
Savings deposits		1,098,194			5,696	2.08			1,044,205			10,146	3.90
Time deposits		833,248			7,587	3.65			783,520			8,944	4.58
Short-term borrowings		23,670			124	2.10			43,610			551	5.07
Long-term borrowings		323			2	2.48			1,022			19	7.46
Junior subordinated debentures		26,805			491	7.35			26,804			491	7.35

Total interest-bearing liabilities		2,413,819			14,425	2.40			2,296,714			20,879	3.65

Interest-free funds:
Noninterest-bearing deposits		944,433							885,271
Interest payable and other liabilities		32,706							20,674
Stockholders’ equity		389,581							360,033

Total interest free funds		1,366,720							1,265,978

Total liabilities and stockholders’ equity	$	3,780,539						$	3,562,692

Net interest income				$	35,026						$	37,709

Net interest spread						3.37	%						3.62	%

Net interest margin						4.08	%						4.68	%

(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)


	Six Months Ended June 30,
	2008							2007
	Average Balance			Interest Income/ Expense		Average Yield/ Rate		Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	2,523,044		$	87,836	6.98	%	$	2,336,054		$	93,932	8.11	%
Securities – taxable		422,741			8,690	4.12			395,170			9,088	4.64
Securities – taxable exempt		33,680			1,013	6.03			35,802			1,084	6.11
Federal funds sold		426,529			5,424	2.55			416,274			10,929	5.29

Total earning assets		3,405,994			102,963	6.06			3,183,300			115,033	7.29

Nonearning assets:
Cash and due from banks		139,560							143,088
Interest receivable and other assets		223,712							208,855
Allowance for loan losses		(30,067	)						(27,600	)

Total nonearning assets		333,205							324,343

Total assets	$	3,739,199						$	3,507,643

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	420,798		$	1,167	0.56	%	$	408,671		$	1,580	0.78	%
Savings deposits		1,097,087			13,606	2.49			1,012,233			19,496	3.88
Time deposits		829,040			16,209	3.92			775,095			17,421	4.53
Short-term borrowings		23,657			308	2.61			37,885			949	5.05
Long-term borrowings		423			9	4.27			1,076			39	7.31
Junior subordinated debentures		26,672			983	7.39			28,876			1,157	8.08

Total interest-bearing liabilities		2,397,677			32,282	2.70			2,263,836			40,642	3.62

Interest-free funds:
Noninterest-bearing deposits		927,744							868,412
Interest payable and other liabilities		29,081							19,600
Stockholders’ equity		384,697							355,795

Total interest free funds		1,341,522							1,243,807

Total liabilities and stockholders’ equity	$	3,739,199						$	3,507,643

Net interest income				$	70,681						$	74,391

Net interest spread						3.36	%						3.67	%

Net interest margin						4.16	%						4.72	%

(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, 2007, 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, Senior Vice President of Corporate Finance and Treasurer, 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 effective 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. No changes were made to the Company’s internal control over financial reporting during the second fiscal quarter of 2008 that materially affected, or are likely to materially affect, the Company’s internal control over financial reporting. There have been no 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 4.

Submission of Matters to a Vote of Security Holders.

At the Company’s Annual Meeting of Stockholders held on May 22, 2008, the following matters were voted upon, with the votes indicated below:


	Number of Shares
Description of Proposal	Voted for	Withheld	Broker non-votes
Proposal No. 1-Election of Directors

*Class I Directors*
Dennis L. Brand	14,092,210	331,763	212,864
C. L. Craig, Jr.	14,293,646	130,327	212,864
John C. Hugon	14,339,795	84,178	212,864
J. Ralph McCalmont	14,327,464	96,509	212,864
Ronald J. Norick	14,339,795	84,178	212,864
David E. Ragland	14,339,795	84,178	212,864

Proposal No. 2-Ratification of Grant Thornton LLP as independent registered public accounting firm	14,351,740	72,233	212,864

PART II – OTHER INFORMATION

Item 6.

Exhibits.

(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 Amendment of the Second Amended and Restated Certificate of Incorporation of BancFirst Corporation (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).

3.3		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).

3.4		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).

3.5		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 quarterly period ended March 31, 2005 and incorporated herein by reference).

3.6		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).

3.7		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 28, 2008 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).


Exhibit Number		Exhibit
4.7		Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including 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 8-K dated February 25, 1999 and incorporated herein by reference).

4.8		Form of Amended and Restated Trust Agreement relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.5 to the Company’s registration statement on From S-3, File No. 333-112488, 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 4.8).

4.10		Form of 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 registration statement on Form S-3, File No. 333-112488, and incorporated herein by reference).

4.11		Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (included in Section 2.2 and Section 2.3 of Exhibit 4.10).

4.12		Form of Guarantee of BancFirst Corporation relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.7 to the Company’s registration statement on Form S-3, File No. 333-112488, and incorporated herein by reference).

10.1		Eighth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.1 to the Company’s Quarter Report on Form 10-Q for the Quarter Ended September 30, 2006 and incorporated herein by reference).

10.2		BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement (filed as Exhibit 10.2 to the Company’s Quarter Report on Form 10-Q for the Quarter Ended March 31, 2008 and incorporated herein by reference).

10.3		BancFirst Corporation Thrift Plan (filed as Exhibit 10.3 to the Company’s Quarter Report on Form 10-Q for the Quarter Ended March 31, 2008 and incorporated herein by reference).

10.4		1988 Incentive Stock Option Plan of Security Corporation as assumed by BancFirst Corporation (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8, File No. 333-65129 and incorporated herein by reference).

10.5		1993 Incentive Stock Option Plan of Security Corporation as assumed by BancFirst Corporation (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8, File No. 333-65129 and incorporated herein by reference).

10.6		1995 Non-Employee Director Stock Plan of AmQuest Financial Corp. as assumed by BancFirst Corporation (filed as Exhibit 4.3 to the Company’s Registration Statement on Form S-8, File No. 333-65129 and incorporated herein by reference).

10.7		Amended and Restated BancFirst Corporation Non-Employee Directors’ Stock Option Plan (filed as Exhibit 10.6 to the Company’s Quarter Report on Form 10-Q for the Quarter Ended June 30, 2006 and incorporated herein by reference).


Exhibit Number		Exhibit
10.8		Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (filed as Exhibit 10.7 to the Company’s Quarter Report on Form 10-Q for the Quarter Ended June 30, 2006 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.

99.1		Amended Stock Repurchase Program (filed as Exhibit 99.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference).

*	Filed herewith.

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 August 8, 2008				/s/ Joe T. Shockley, Jr.
				(Signature)
				Joe T. Shockley, Jr.
				Executive Vice President Chief Financial Officer