BancFirst (BANF)

Oklahoma-based financial institution BancFirst Corporation (NASDAQ:BANF) met Wall Streets revenue expectations in Q3 CY2025, with sales up 6.7% year on year to $175.2 million. Its non-GAAP profit of $1.85 per share was 0.5% below 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.

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Over the last five years, BancFirst grew its revenue at a mediocre 8.9% compounded annual growth rate. This fell short of our benchmark for the banking sector and is a tough 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 4.4% 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 grew its revenue by 6.7% year on year, and its $175.2 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 68.4% of the company’s total revenue during the last five years, meaning lending operations are BancFirst’s largest source of revenue.

While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, BancFirst’s efficiency ratio has swelled by 4.9 percentage points, going from 57.4% to 53.5%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q3, BancFirst’s efficiency ratio was 52.5%, falling short of analysts’ expectations by 47 basis points (100 basis points = 1 percentage point). This result was in line with 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 54.4%.

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 18.6% compounded annual growth rate over the last five years, higher than its 8.9% 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.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For BancFirst, its two-year annual EPS growth of 3.5% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, BancFirst reported adjusted EPS of $1.85, up from $1.75 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects BancFirst’s full-year EPS of $7.05 to stay about the same.

Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

BancFirst’s TBVPS grew at an incredible 11.5% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 13.9% annually over the last two years from $35.56 to $46.12 per share.

Over the next 12 months, Consensus estimates call for BancFirst’s TBVPS to grow by 14.7% to $52.89, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm 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 firms 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, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, BancFirst has averaged a Tier 1 capital ratio of 16.2%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, BancFirst has averaged an ROE of 15.1%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for BancFirst.

It was good to see BancFirst narrowly top analysts’ net interest income expectations this quarter. On the other hand, its tangible book value per share missed and its EPS fell a bit short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $111.57 immediately following the results.

Updated: December 17, 2025 at 11:57 PM EST

Are you wondering whether to buy BancFirst or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

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 astounding EPS growth over the last five years shows its profits are trickling down to shareholders. Tread carefully 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 2.1x. Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. 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 $111.57).