$78.45
$139.98
bear $78.45
base $124.96
bull $139.98
margin of safety $62.00
market price* $109.03
BancFirst is a bank holding company based in Oklahoma City. Its main bank, BancFirst, runs 109 banking locations in 62 Oklahoma communities. The company also owns Pegasus Bank (three locations in the Dallas area) and Worthington Bank (three Fort Worth-area locations plus Arlington and Denton). It lends to small and mid-sized businesses, real estate owners and developers, farmers, energy companies and consumers, and it funds those loans with local deposits: $12.7 billion at the end of 2025 against roughly $8.5 billion of loans, with 30.8% of deposits paying no interest. Over the decades it has grown by buying banks (more than 40), plus branches, insurance agencies and new branches. The latest purchase, American Bank of Oklahoma, closed on November 17, 2025 and was merged into BancFirst in February 2026. HOW WE MEASURE EARNINGS. For a bank, interest is the cost of raw material and loan losses are a real cost, so we start from net income, add back depreciation, and subtract the capital spending needed to keep the franchise running. Stock compensation is already expensed in net income. Capital spending was $48.3 million in 2025 against $22.5 million of depreciation; we treated about $44 million of it as maintenance and about $4 million as growth. On that basis earnings per share were $4.90 in 2021, $5.99 in 2022, $6.44 in 2023, $6.03 in 2024 and $6.47 in 2025 (reported diluted EPS for 2025 was $7.11; the difference is the capital spending). Our normal earnings level is $6.24, the middle of 2022 to 2025. We left out 2021 because it was a near-zero-rate year that also included an $8.7 million release of loan-loss reserves, and 2020, when pandemic-year loan-loss provisions of $62.6 million and $66.4 million of capital spending cut the figure to $1.60. Earnings per share grew 7.3% in 2025 after falling in 2024. Our previous estimates (bear $76, base $129, bull $167) were prepared on a different basis and are not comparable. What has changed in the business since then is the closing of American Bank of Oklahoma and the first-half 2026 results described below. BASE CASE: $124.96 per share. Earnings start at $6.24, grow 6% a year for three years, 4.5% for three years and 3% for four years, then stay flat at about $9.54 per share. The first-year 6% is below the 7.3% actually achieved in 2025. Growth credited is limited to what is already in hand or is a long-proven habit: American Bank of Oklahoma contributed only about six weeks to 2025, and first-half 2026 net income was $129.7 million against $118.5 million a year earlier (up 9.5%), with net interest income up 10.1% and fee income up 8.7%; and the company has made small acquisitions and added branches funded from its own cash for decades, so growth tapers as that room is used. Growth must be paid for with retained capital: we assume equity grows in step with earnings, and book value was $57.46 per diluted share at June 30, 2026 ($1.957 billion of equity). So in the first year only about $3.16 of roughly $6.61 of earnings is distributable. We give no credit for share gains, wider margins, new markets beyond the existing Texas banks, or for surplus capital being paid out (equity is 12.5% of assets). After year ten we assume no further growth: the deposit franchise keeps earning, but we cannot point to evidence for more. A bank's deposits are its raw material rather than borrowings, so no debt is subtracted; the parent's subordinated debt of about $86 million (debentures due 2034, notes due 2036) is a cost already inside net income. Business value and the share value are the same number, $124.96. BEAR CASE: $78.45 per share. Two named risks hit together, as they did in prior cycles. First, falling short-term rates: with 30.8% of deposits non-interest-bearing and loans funding only about two-thirds of deposits (67.2% average loans to deposits in 2025), margins shrink quickly when rates fall. In 2021, a zero-rate year, earnings were $4.90 per share, 21% below our normal level. The case moves halfway there in year one ($5.57) and holds $4.90 flat forever, with no growth credited. Second, one full credit cycle shaped like 2008 to 2011. Federal Reserve data show all U.S. commercial banks charged off 1.43%, 2.65%, 2.67% and 1.64% of loans on average in 2008, 2009, 2010 and 2011. BancFirst's own 2009 charge-off rate was 0.30%, about 11% of the industry's, and its net income fell 26.5% from 2008 to 2009. We assume BancFirst loses one third of the industry rate each year, roughly three times its own relative record, on $8.5 billion of loans. That adds $32 million, $66 million, $67 million and $38 million of pre-tax losses above today's level in years two through five ($203.5 million in total, about 11% of equity); after 21% tax, that costs $0.74, $1.54, $1.56 and $0.88 per share, so earnings run $4.16, $3.36, $3.34 and $4.02 in those years before returning to $4.90. By comparison, 2020 net income fell 26.2%. Capital is not threatened (equity is 12.5% of assets and tangible common equity about 11.3%), so no stock issuance at low prices is needed. This value is above tangible book value of $49.20 because the low-cost deposit base kept earning in every year we examined (2021 earnings were $4.90 per share at zero rates, about 8.9% on year-end 2025 book value) and the case still earns something every year. BULL CASE: $139.98 per share. Earnings start at the 2025 level of $6.47 and grow 8% a year for three years, 6% for three and 4% for four, then stay flat at about $11.36. The 8% is above the 7.3% of 2025 for a dated reason: first-half 2026 net income per diluted share rose 8.6%, with a full year of American Bank of Oklahoma still to come. The extra growth requires retaining more capital, so the bull case is only modestly above base. WHAT COULD MAKE THIS WRONG. If the growth we credit does not appear, the shares are worth about $104 (flat earnings of $6.24 with everything distributed). If rates fall to 2021-like levels without any credit cycle, about $82. With both and a credit cycle, about $78. We also checked credit quality against specific facts rather than assumption. Net charge-offs were $8.5 million in 2025 (0.10% of average loans, versus 0.08% in 2024), nonaccrual loans were 0.72% of loans in both years, and the allowance of $104.3 million covered 170.6% of nonaccruals. During the 2015 to 2016 oil price collapse, net income still rose from $66.2 million to $70.7 million, even with a $11.5 million provision in 2016. In the first half of 2026 the provision rose to $7.0 million from $3.0 million, but gross charge-offs fell to $4.5 million from $5.8 million and the allowance grew to $107.8 million, so the higher provision is reserve-building rather than realized losses. Outcomes our cases do not model: a loss rate at the full 2009 industry level (2.65% of loans) for a year would cost about $216 million more than today's level against 2025 pre-tax income of $305.1 million; four years of full industry-level losses (about $713 million) would equal about 38% of equity, which the bank would survive. MARGIN-OF-SAFETY PRICE: $62. We are fairly confident of the earnings level: net income has been positive every year since 2016, and the normal level sits inside a range of $5.99 to $6.47 over the last four years. The thing most likely to move it is the interest-rate path, and a lesser one is the credit cycle; neither is likely to threaten the franchise, given the capital, the liquidity ($12.8 billion of deposits at June 30, 2026 against about $8.5 billion of loans) and the deposit mix. The price assumes a holding period of about five years, during which the company pays dividends: dividends were $1.90 per share in 2025, up from $1.78 in 2024 and $1.66 in 2023, and are now $0.49 per quarter, less than a third of earnings. If the base case plays out and the shares reach roughly their then-estimated value in five years, with dividends along the way, about $65 is the highest price from which the base case implies 20% a year. We set $62 rather than $65 because the dividend and exit assumptions are ours and the earnings level depends on rates. At $62, the bear case, which has low rates and a severe credit cycle, still values each share at $78, above the margin-of-safety price.