BancFirst (BANF)

Oklahoma-based financial institution BancFirst Corporation (NASDAQ:BANF) announced better-than-expected revenue in Q2 CY2025, with sales up 10.1% year on year to $169.3 million. Its GAAP profit of $1.84 per share was 12% above analysts’ consensus estimates.

Company Overview

Operating as a "super community bank" with a decentralized management approach that emphasizes local responsiveness, BancFirst Corporation (NASDAQ:BANF) operates as a financial holding company providing commercial banking services to retail customers and small to medium-sized businesses primarily in Oklahoma and Texas.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

BancFirst Corporation competes with other regional banks operating in Oklahoma and Texas, including BOK Financial Corporation (NASDAQ:BOKF), Prosperity Bancshares (NYSE:PB), and Simmons First National Corporation (NASDAQ:SFNC), as well as national banks with significant presence in its markets.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities.

Luckily, BancFirst’s revenue grew at a solid 8.7% compounded annual growth rate over the last five years. Its growth beat the average bank company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. BancFirst’s recent performance shows its demand has slowed as its annualized revenue growth of 3.3% over the last two years was below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, BancFirst reported year-on-year revenue growth of 10.1%, and its $169.3 million of revenue exceeded Wall Street’s estimates by 3%.

Net interest income made up 68.3% of the company’s total revenue during the last five years, meaning lending operations are BancFirst’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

The underlying profitability of top-line growth determines the actual bottom-line impact. Banking institutions measure this dynamic using the efficiency ratio, which is calculated by dividing non-interest expenses like personnel, facilities, technology, and marketing by total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last four years, BancFirst’s efficiency ratio has decreased by 4.2 percentage points, clocking in at 53.7% for the past 12 months. Said differently, the company’s expenses have grown at a slower rate than revenue, which is always a positive sign.

BancFirst’s efficiency ratio came in at 52.1% this quarter, beating analysts’ expectations by 3.7%. This print was 3.4 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects BancFirst to maintain its trailing one-year ratio with a projection of 54.3%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

BancFirst’s EPS grew at an astounding 15.5% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. However, we take this with a grain of salt because its efficiency ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

In Q2, BancFirst reported EPS at $1.84, up from $1.51 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects BancFirst’s full-year EPS of $6.93 to shrink by 2.1%.

Banks are balance sheet-driven businesses because they generate earnings primarily through borrowing and lending. They’re also valued based on their balance sheet strength and ability to compound book value (another name for shareholders’ equity) over time.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

BancFirst’s TBVPS grew at an incredible 11% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 13.3% annually over the last two years from $34.62 to $44.47 per share.

Over the next 12 months, Consensus estimates call for BancFirst’s TBVPS to grow by 14.3% to $50.84, top-notch growth rate.

Leverage is core to the bank’s business model (loans funded by deposits) and to ensure their stability, regulators require certain levels of capital and liquidity, focusing on a bank’s Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a bank holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all banks must maintain a Tier 1 capital ratio greater than 4.5% On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, banks generally must maintain a 7-10% ratio at minimum.

Over the last two years, BancFirst has averaged a Tier 1 capital ratio of 15.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, BancFirst has averaged an ROE of 14.7%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows BancFirst has a strong competitive moat.

We enjoyed seeing BancFirst beat analysts’ revenue expectations this quarter. We were also happy its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 1.1% to $133 immediately after reporting.

Updated: December 3, 2025 at 11:52 PM EST

Before deciding whether to buy BancFirst or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

BancFirst isn’t a bad business, but we’re not clamoring to buy it here and now. Although its revenue growth was mediocre over the last five years and analysts expect growth to slow over the next 12 months, its TBVPS growth was exceptional over the last five years. We advise investors to be cautious with this one, however, as its projected EPS for the next year is lacking.

BancFirst’s P/B ratio based on the next 12 months is 2x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $121.67 on the company (compared to the current share price of $111.20).