BancFirst Corporation: A Dividend Titan with Momentum in a Challenging Landscape

BancFirst Corporation (NASDAQ:BANF) stands at a pivotal moment, combining a 33-year dividend track record with robust Q1 2025 financial results and a strategic acquisition to fuel future growth. In an environment of macroeconomic uncertainty and market volatility, this regional banking powerhouse offers investors a rare blend of income reliability, asset quality resilience, and expansion opportunities. Let's dissect why now is the time to act.

Dividend Consistency: A 33-Year Unbroken Legacy

BancFirst's dividend history is nothing short of extraordinary. With 27 consecutive years of dividend increases, it has delivered consistent income to shareholders through recessions, market crashes, and regulatory headwinds. The most recent dividend of $0.46 per share (paid April 15, 2025) marks another step in this trajectory, with the next payout expected on July 15, 2025, maintaining the 1.5% yield—a reliable return in a low-yield world.

The dividend's compound annual growth rate (CAGR) of 8.05% since 2020 underscores management's commitment to rewarding shareholders. Even during the Volcker Rule-related expense spike in Q1 2025, the dividend remained untouched, reflecting the company's financial discipline.

Q1 2025 Earnings: A Beat That Signals Resilience

BancFirst's Q1 results were a masterclass in navigating headwinds. The company reported:
- EPS of $1.67, 5.7% above estimates and 11.3% higher than Q1 2024.
- Revenue of $164.84 million, a 3.1% beat driven by 9.2% growth in net interest income to $115.9 million.
- Noninterest income rose 9.1% to $49.0 million, fueled by trust services, treasury income, and insurance commissions.

While noninterest expenses increased 10.2% to $92.2 million (due to a $4.4 million Volcker Rule compliance cost), the core efficiency ratio remained manageable at 55.9%, and asset quality held firm:
- Nonaccrual loans at 0.70% of total loans—near historic lows.
- Allowance for credit losses at 1.24%, unchanged from year-end 2024, signaling prudent risk management.

The return on average equity (13.85%) and rising equity base ($1.7 billion) further cement its "GOOD" financial health rating, a critical shield against economic slowdowns.

Strategic Expansion: The Oklahoma Bank Acquisition

BancFirst's pending acquisition of American Bank of Oklahoma (ABOK)—a $385 million-asset institution—will expand its footprint into Tulsa, a key growth market. This move:
- Adds $385 million in deposits and $265 million in loans, boosting scale without overextending capital.
- Enhances cross-selling opportunities in wealth management and commercial lending, key profit drivers for BancFirst.

Completion by late 2025 could increase total assets to $14.4 billion, positioning BancFirst as Oklahoma's second-largest regional bank. CEO David Harlow's cautious outlook—highlighting bond/equity market volatility—fails to overshadow the strategic clarity of this move.

Why the Bulls Will Prevail Despite Near-Term Concerns

Critics may point to the Zacks Rank #4 (Sell), citing short-term earnings estimate revisions. But this overlooks three critical factors:
1. Dividend Safety: The payout ratio of 26% leaves ample room for growth even if earnings flatten.
2. Balance Sheet Strength: Total assets rose $484 million YoY, with deposits up 3.4%, reflecting sticky customer relationships.
3. Sector Tailwinds: The Southwest Banks industry ranks in the top 11% of all sectors, benefiting from regional economic diversity (energy, tech, and agriculture).

While BANF has underperformed the S&P 500 (-8.3% vs. -10.3% YTD), its 16.78 forward P/E suggests it's undervalued relative to peers like FinWise Bancorp (FINW), which trades at a similar P/E but lacks BANF's dividend history.

Final Call: Buy Now—A Dividend Anchor in a Volatile Market

BancFirst Corporation is a low-risk, high-reward proposition. Its 33-year dividend legacy, Q1 earnings beat, and strategic acquisition collectively argue for a buy rating. Investors seeking income stability with growth potential should:
- Act Immediately: The current yield of 1.5% and low P/E provide a margin of safety.
- Hold for the Long Term: The acquisition and organic loan growth (up $69.6 million in Q1) ensure a multiyear earnings runway.

In a world of uncertainty, BancFirst's consistency is its greatest asset.

This article is for informational purposes only. Always conduct your own research before making investment decisions.