Edgar Filing: BANCFIRST CORP /OK/

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Form 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 31, 2010		Commission File Number 0-14384

BANCFIRST CORPORATION

(Exact name of registrant as specified in its charter)


OKLAHOMA		73-1221379
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

101 North Broadway, Oklahoma City, Oklahoma 73102

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (405) 270-1086

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, $1.00 Par Value Per Share		NASDAQ Global Select Market System

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required 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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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.

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

The aggregate market value of the Common Stock held by nonaffiliates of the registrant computed using the last sale price on June 30, 2010 was approximately $270,901,000.

As of February 28, 2011, there were 15,379,756 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Proxy Statement for the 2011 Annual Meeting of Stockholders of the registrant (the “2011 Proxy Statement”) to be filed pursuant to Regulation 14A are incorporated by reference into Part III of this report.

FORM 10-K

CROSS-REFERENCE INDEX


Item	PART I	Page
1.	Business.		1

1a.	Risk Factors.		13

1b.	Unresolved Staff Comments.		21

2.	Properties.		21

3.	Legal Proceedings.		21

4.	Reserved.		21

	PART II

5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		21

6.	Selected Financial Data.		22

7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		22

7A.	Quantitative and Qualitative Disclosures About Market Risk.		22

8.	Financial Statements and Supplementary Data.		22

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		23

9A.	Controls and Procedures.		23

9B.	Other Information.		23

	PART III

10.	Directors, Executive Officers and Corporate Governance.		23

11.	Executive Compensation.		23

12.	Security Ownership of Certain Beneficial Owners and Management		23

13.	Certain Relationships and Related Transactions and Director Independence.		24

14.	Principal Accountant Fees and Services.		24

	PART IV

15.	Exhibits and Financial Statement Schedules.		24

Signatures.			27

Financial Information.			Appendix A

PART I

Item 1. Business.

General

BancFirst Corporation (the “Company”) is an Oklahoma business corporation and a financial holding company under Federal law. It conducts virtually all of its operating activities through its principal wholly-owned subsidiary, BancFirst (the “Bank” or “BancFirst”), a state-chartered bank headquartered in Oklahoma City, Oklahoma. The Company also owns 100% of the common securities of BFC Capital Trust II and 100% of the common securities of Union National Statutory Trust I, both Delaware business trusts; 100% of Exchange National Bank of Moore in Moore, Oklahoma; 100% of Okemah National Bank in Okemah, Oklahoma; 100% of Council Oak Partners LLC, an Oklahoma limited liability company engaging in investing activities, and 100% of BancFirst Insurance Services, Inc., an Oklahoma business corporation operating as an independent insurance agency. The Company plans to merge Exchange National Bank of Moore and Okemah National Bank into BancFirst during 2011.

The Company was incorporated as United Community Corporation in July 1984 for the purpose of becoming a bank holding company. In June 1985, it merged with seven Oklahoma bank holding companies that had operated under common ownership and the Company has conducted business as a bank holding company since that time. Over the next several years the Company acquired additional banks and bank holding companies, and in November 1988 the Company changed its name to BancFirst Corporation. Effective April 1, 1989, the Company consolidated its 12 subsidiary banks and formed BancFirst. Over the intervening decades, the Company has continued to expand through acquisitions and de-novo branches. The Company currently has 89 banking locations serving 50 communities throughout Oklahoma.

The Company’s strategy focuses on providing a full range of commercial banking services to retail customers and small to medium-sized businesses in both the non-metropolitan trade centers of Oklahoma and the metropolitan markets of Oklahoma City, Tulsa, Lawton, Muskogee, Norman and Shawnee. The Company operates as a “super community bank”, managing its community banking offices on a decentralized basis, which permits them to be responsive to local customer needs. Underwriting, funding, customer service and pricing decisions are made by presidents in each market within the Company’s strategic parameters. At the same time, the Company generally has a larger lending capacity, broader product line and greater operational scale than its principal competitors in the non-metropolitan market areas (which typically are independently-owned community banks). In the metropolitan markets served by the Company, the Company’s strategy is to focus on the needs of local businesses that are not served adequately by larger institutions.

The Bank maintains a strong community orientation by, among other things, selecting members of the communities in which the Bank’s branches operate to local consulting boards that assist in marketing and providing feedback on the Bank’s products and services to meet customer needs. As a result of the development of broad banking relationships with its customers and community branch network, the Bank’s lending and investing activities are funded almost entirely by core deposits.

The Bank centralizes virtually all of its processing, support and investment functions in order to achieve consistency and operational efficiencies. The Bank maintains centralized control functions such as operations support, bookkeeping, accounting, loan review, compliance and internal auditing to ensure effective risk management. The Bank also provides centrally certain specialized financial services that require unique expertise.

The Bank provides a wide range of retail and commercial banking services, including: commercial, real estate, agricultural and consumer lending; depository and funds transfer services; collections; safe deposit boxes; cash management services; retail brokerage services; and other services tailored for both individual and corporate customers. The Bank also offers trust services and acts as executor, administrator, trustee, transfer agent and in various other fiduciary capacities. Through its Technology and Operations Center, the Bank provides item processing, research and other correspondent banking services to financial institutions and governmental units.

The Bank’s primary lending activity is the financing of business and industry in its market areas. Its commercial loan customers are generally small to medium-sized businesses engaged in light manufacturing, local wholesale and retail trade, commercial and residential real estate development and construction, services, agriculture, and the energy industry. Most forms of commercial lending are offered, including commercial mortgages, other forms of asset-based financing and working capital lines of credit. In addition, the Bank offers Small Business Administration (“SBA”) guaranteed loans through BancFirst Commercial Capital, a division established in 1991.

Consumer lending activities of the Bank consist of traditional forms of financing for automobiles, residential mortgage loans, home equity loans, and other personal loans. Residential loans consist primarily of home loans in non-metropolitan areas which are generally shorter in duration than typical mortgages and reprice within five years.

The Bank’s range of deposit services include checking accounts, Negotiable Order of Withdrawal (“NOW”) accounts, savings accounts, money market accounts, sweep accounts, club accounts, individual retirement accounts and certificates of deposit. Overdraft protection and autodraft services are also offered. Deposits of the Bank are insured by the Bank Insurance Fund administered by the Federal Deposit Insurance Corporation (“FDIC”). In addition, certain Bank employees are licensed insurance agents qualified to offer tax deferred annuities.

Trust services offered through the Bank’s Trust and Investment Management Division (the “Trust Division”) consist primarily of investment management and administration of trusts for individuals, corporations and employee benefit plans. Investment options include pooled equity and fixed income funds managed by the Trust Division and advised by nationally recognized investment management firms. In addition, the Trust Division serves as bond trustee and paying agent for various Oklahoma municipalities and governmental entities.

BancFirst has the following principal subsidiaries: Council Oak Investment Corporation, a small business investment corporation, Council Oak Real Estate, Inc., a real estate investment company, BancFirst Agency, Inc., a credit life insurance agency, Lenders Collection Corporation, which is engaged in collection of troubled loans assigned to it by BancFirst, and BancFirst Community Development Corporation, a certified community development entity. All of these companies are Oklahoma corporations.

The Company had approximately 1,532 full-time equivalent employees at December 31, 2010, compared to approximately 1,428 full-time equivalent employees at December 31, 2009. Its principal executive offices are located at 101 North Broadway, Oklahoma City, Oklahoma 73102, telephone number (405) 270-1086.

Market Areas and Competition

The banking environment in Oklahoma is very competitive. The geographic dispersion of the Company’s banking locations presents several different levels and types of competition. In general, however, each location competes with other banking institutions, savings and loan associations, brokerage firms, personal loan finance companies and credit unions within their respective market areas. The communities in which the Bank maintains offices are generally local trade centers throughout Oklahoma. The major areas of competition include interest rates charged on loans, underwriting terms and conditions, interest rates paid on deposits, fees on non-credit services, levels of service charges on deposits, completeness of product line and quality of service.

Management believes the Company is in an advantageous competitive position operating as a “super community bank.” Under this strategy, the Company provides a broad line of financial products and services to small to medium-sized businesses and consumers through full service community banking offices with decentralized management, while achieving operating efficiency and product scale through product standardization and centralization of processing and other functions. Each full service banking office has senior management with significant lending experience who exercise substantial autonomy over credit and pricing decisions. This decentralized management approach, coupled with continuity of service by the same staff

members, enables the Bank to develop long-term customer relationships, maintain high quality service and respond quickly to customer needs. The majority of its competitors in the non-metropolitan areas are much smaller, and neither offer the range of products and services nor have the lending capacity of BancFirst. In the metropolitan communities, the Company’s strategy is to be more responsive to, and more focused on, the needs of local businesses that are not served effectively by larger institutions. As reported by the FDIC, the Company’s market share of deposits for Oklahoma was 6.25% as of June 30, 2010 and 5.64% as of June 30, 2009.

Marketing to existing and potential customers is performed through a variety of media advertising, direct mail and direct personal contacts. The Company monitors the needs of its customer base through its Product Development Group, which develops and enhances products and services in response to such needs. Sales, customer service and product training are coordinated with incentive programs to motivate employees to cross-sell the Bank’s products and services.

Operating Segments

The Company has four principal business units: metropolitan banks, community banks, other financial services, and executive, operations and support. For more information on the Company’s Operating Segments see Note (22), “Segment Information” to the Company’s Consolidated Financial Statements.

Control of the Company

Affiliates of the Company beneficially own approximately 53% of the outstanding shares of the Company’s common stock outstanding as of February 28, 2011. Under Oklahoma law and the Company’s Certificate of Incorporation, holders of a majority of the outstanding shares of common stock are able to elect all of the directors and approve significant corporate actions, including business combinations. Accordingly, the affiliates have the ability to control the business and affairs of the Company.

Supervision and Regulation

Banking is a complex, highly regulated industry. The Company’s growth and earnings performance and those of the Bank can be affected not only by management decisions and general and local economic conditions, but also by the statutes administered by, and the regulations and policies of, various governmental regulatory authorities. These authorities include, but are not limited to, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC and the Oklahoma State Banking Department.

The primary goals of the bank regulatory framework are to maintain a safe and sound banking system and to facilitate the conduct of sound monetary policy. This regulatory framework is intended primarily for the protection of a financial institution’s depositors, rather than the institution’s shareholders and creditors. The following discussion describes certain of the material elements of the regulatory framework applicable to bank holding companies and financial holding companies and their subsidiaries and provides certain specific information relevant to the Company, which is both a bank holding company and a financial holding company. The descriptions are qualified in their entirety by reference to the specific statutes and regulations discussed. Further, such statutes, regulations and policies are continually under review by Congress and state legislatures, and federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to the Company, including changes in interpretation or implementation thereof, could have a material effect on the Company’s business.

Regulatory Agencies

As a financial holding company and a bank holding company, the Company is regulated under the Bank Holding Company Act of 1956 (the “Bank Holding Company Act”), as amended by the 1999 financial modernization legislation known as the Gramm-Leach-Bliley Act (the “GLB Act”), as well as other federal and

state laws governing the banking business. The GLB Act preserves the role of the Federal Reserve Board as the umbrella supervisor for both financial holding companies and bank holding companies while at the same time incorporating a system of functional regulation designed to take advantage of the strengths of the various federal and state regulators. In particular, the GLB Act replaces with more limited exemptions the broad exemption from Securities and Exchange Commission (“SEC”) regulation that banks previously enjoyed, and it reaffirms that states are the regulators for the insurance activities of all persons who conduct such activities, including banks.

The Company’s banking subsidiary is subject to regulation and supervision by various regulatory authorities, including the Oklahoma State Banking Department and the FDIC. The Company and its subsidiaries and affiliates are also subject to various other laws, regulations, supervision and examination by other regulatory agencies, all of which directly or indirectly affect the operations and management of the Company and its ability to make distributions to shareholders.

Additionally, the Company’s common stock is registered with the SEC under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consequently, the Company is subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act and, as a company whose shares are traded on the NASDAQ Global Select Market System, the rules of the NASDAQ Stock Market, Inc. (the “NASDAQ”).

Bank Holding Company Activities

“Financial in Nature” Requirement

As a bank holding company that has elected to become a financial holding company pursuant to the Bank Holding Company Act, the Company may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. “Financial in nature” activities include securities underwriting, dealing and market making, sponsoring mutual funds and investment companies, insurance underwriting and agency, merchant banking, and other activities that the Federal Reserve Board, in consultation with the Secretary of the U.S. Treasury, determines from time to time to be financial in nature or incidental to such financial activity or is complementary to a financial activity and does not pose a safety and soundness risk.

Federal Reserve Board approval is not required for the Company to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board. Prior Federal Reserve Board approval is required before the Company may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association.

Because the Company is a financial holding company, if its subsidiary bank receives a rating under the Community Reinvestment Act of 1977, as amended (“CRA”), of less than satisfactory, the Company will be prohibited, until the rating is raised to satisfactory or better, from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations, except that the Company could engage in new activities, or acquire companies engaged in activities, that are closely related to banking under the Bank Holding Company Act. In addition, if the Federal Reserve Board finds that the Company’s subsidiary bank is not well capitalized or well managed, the Company would be required to enter into an agreement with the Federal Reserve Board to comply with all applicable capital and management requirements and which may contain additional limitations or conditions. Until corrected, the Company would not be able to engage in any new activity or acquire companies engaged in activities that are not closely related to banking under the Bank Holding Company Act without prior Federal Reserve Board approval. If the Company fails to correct any such condition within a prescribed period, the Federal Reserve Board could order the Company to divest of its banking subsidiary or, in the alternative, to cease engaging in activities other than those closely related to banking under the Bank Holding Company Act. Although the Company is a financial holding company, it continues to maintain its status as a bank holding company for purposes of other Federal Reserve Board regulations.

Interstate Banking

Under the Riegle-Neal Interstate Banking and Branching Act (the “Riegle-Neal Act”), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state).

The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate branches. Banks are also permitted to acquire and to establish new branches in other states where authorized under the laws of those states.

Regulatory Approval

In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, financial condition, and future prospects including current and projected capital ratios and levels, the competence, experience, and integrity of management and record of compliance with laws and regulations, the convenience and needs of the communities to be served, including the acquiring institution’s record of compliance under the CRA, and the effectiveness of the acquiring institution in combating money laundering activities.

Dividend Restrictions

Various federal and state statutory provisions and regulations limit the amount of dividends the Company’s subsidiary bank and certain other subsidiaries may pay without regulatory approval. The payment of dividends by any subsidiary bank may also be affected by other regulatory requirements and policies, such as the maintenance of adequate capital. If, in the opinion of the applicable regulatory authority, a bank under its jurisdiction is engaged in, or is about to engage in, an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), such authority may require, after notice and hearing, that such bank cease and desist from such practice. The FDIC has formal and informal policies which provide that insured banks should generally pay dividends only out of current operating earnings.

Holding Company Structure

Transfer of Funds from Subsidiary Bank

The Bank is subject to restrictions under federal law that limit the transfer of funds or other items of value from the Bank to the Company and its nonbank subsidiaries (including affiliates) in so-called “covered transactions.” In general, covered transactions include loans and other extensions of credit, investments and asset purchases, as well as certain other transactions involving the transfer of value from a subsidiary bank to an affiliate or for the benefit of an affiliate. Unless an exemption applies, covered transactions by a subsidiary bank with a single affiliate are limited to 10% of the subsidiary bank’s capital and surplus and, with respect to all covered transactions with affiliates in the aggregate, to 20% of the subsidiary bank’s capital and surplus. Also, loans and extensions of credit to affiliates generally are required to be secured in specified amounts. A bank’s transactions with its nonbank affiliates are also generally required to be on arm’s length terms.

Source of Strength

Federal Reserve Board policy requires bank holding companies to act as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required at times when the bank holding company may not have the resources to provide the support.

The FDIC may order the assessment of the Company if the capital of the Bank were to become impaired. If the Company failed to pay the assessment within three months, the FDIC could order the sale of the Company’s stock in the Bank to cover the deficiency.

Capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and certain other indebtedness of the subsidiary bank. In addition, in the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of its subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

Depositor Preference

The Federal Deposit Insurance Act (the “FDI Act”) provides that, in the event of the “liquidation or other resolution” of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver, will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors with respect to any extensions of credit they have made to such insured depository institution.

Capital Requirements

The Federal Reserve Board, the Comptroller of the Currency and the FDIC have issued substantially similar risk-based and leverage capital guidelines applicable to United States banking organizations. In addition, these regulatory agencies may from time to time require that a banking organization maintain capital above the minimum levels, whether because of its financial condition or actual or anticipated growth. The risk-based guidelines of the FDIC, the regulatory agency with oversight over state nonmember banks such as the Bank, define a three-tier capital framework. Core, or “Tier 1,” capital, consists of common and qualifying preferred stockholders’ equity, less certain intangibles and other adjustments. Supplementary, or “Tier 2,” capital includes, among other items, certain other debt and equity investments that do not qualify as Tier 1 capital. Market risk, or “Tier 3,” capital, includes qualifying unsecured subordinated debt. The sum of Tier 1 and Tier 2 capital less investments in unconsolidated subsidiaries represents qualifying total capital. Risk-based capital ratios are calculated by dividing Tier 1 and total capital by risk-weighted assets. Assets and off-balance sheet exposures are assigned to one of four categories of risk-weights, based primarily on relative credit risk. The minimum Tier 1 capital ratio is 4% and the minimum total capital ratio is 8%.

Applicable banking regulations also require banking organizations such as the Bank to maintain a minimum “leverage ratio” (Tier 1 capital to adjusted total assets) of 3%. The principal objective of this measure is to place a constraint on the maximum degree to which banks can leverage their equity capital base. These ratio requirements are minimums. Any institution operating at or near those levels would be expected by the regulators to have well-diversified risk, including no undue interest rate risk exposures, excellent asset quality, high liquidity, and good earnings and, in general, would have to be considered a strong banking organization. All other organizations and any institutions experiencing or anticipating significant growth are expected to maintain capital ratios at least one to two percent above the minimum levels, and higher capital ratios can be required if warranted by particular circumstances or risk profile.

The various regulatory agencies have adopted substantially similar regulations that define the five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) for classifying insured depository institutions, using the total risk-based capital, Tier 1 risk-based capital and leverage capital ratios as the relevant capital measures, and requires the respective federal regulatory agencies to implement systems for “prompt corrective action” for insured depository institutions that do not meet minimum capital requirements within such categories. Such regulations establish progressively more restrictive constraints on operations, management and capital distributions depending on the category in which an institution is classified.

To be “well capitalized” under federal bank regulatory agency definitions, a depository institution must have (i) a Tier 1 risk-based capital ratio of 6% or greater, (ii) a total risk-based capital ratio of 10% or greater, and (iii) a leverage ratio of 5% or greater. An “adequately capitalized” bank is defined as one that has (i) a Tier 1 risk-based capital ratio of 4% or greater, (ii) a total risk-based capital ratio of 8% or greater, and (iii) a leverage ratio of 4% or greater, and an “undercapitalized” bank is defined as one that has (i) a Tier 1 risk-based capital ratio of less than 4%, (ii) a total risk-based capital ratio of less than 8%, and (iii) a leverage ratio of less than 4%. A bank is considered “significantly undercapitalized” if the bank has (i) a Tier 1 risk-based capital ratio of less than 3%, (ii) a total risk-based capital ratio of less than 6%, and (iii) a leverage ratio of less than 3%, and “critically undercapitalized” if the bank has a ratio of tangible equity to total assets equal to or less than 2%. The applicable federal regulatory agency for a bank that is “well capitalized” may reclassify it as an “adequately capitalized” or “undercapitalized” institution and subject it to the supervisory actions applicable to the next lower capital category, if it determines that the bank is in an unsafe or unsound condition or deems the bank to be engaged in an unsafe or unsound practice and not to have corrected the deficiency. Under federal banking laws, failure to meet the minimum regulatory capital requirements could subject a banking institution to a variety of enforcement remedies available to federal regulatory authorities, including the termination of deposit insurance by the FDIC and seizure of the institution. As of December 31, 2010, the Bank had a Tier 1 ratio of 13.37%, a combined Tier 1 and Tier 2 ratio of 14.57%, and a leverage ratio of 8.37% and, accordingly, was considered to be “well capitalized” as of such date.

In addition, the Federal Reserve Board has established minimum risk based capital guidelines and leverage ratio guidelines for bank holding companies that are substantially similar to those adopted by bank regulatory agencies with respect to depository institutions. These guidelines provide for a minimum leverage ratio of 3% for bank holding companies that meet certain specified criteria, including those having the highest regulatory rating. All other bank holding companies generally are required to maintain a leverage ratio of at least 4%. As of December 31, 2010, the Company had a Tier 1 ratio of 13.53%, a combined Tier 1 and Tier 2 ratio of 14.68%, and a leverage ratio of 8.39% and, accordingly, was in compliance with all of the Federal Reserve Board’s capital guidelines.

From time to time, the Federal Reserve Board and the Federal Financial Institutions Examination Council propose changes and amendments to, and issue interpretations of, risk-based capital guidelines and related reporting instructions. Such proposals or interpretations could, if implemented in the future, affect the Company’s reported capital ratios and net risk-adjusted assets.

As an additional means to identify problems in the financial management of depository institutions, the FDI Act requires federal bank regulatory agencies to establish certain non-capital safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality, interest rate exposure and executive compensation. The agencies are authorized to take action against institutions that fail to meet such standards.

The FDI Act requires federal bank regulatory agencies to take “prompt corrective action” with respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A depository institution’s treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other factors, as established by regulation.

Deposit Insurance Assessments

The Bank is a member of the Deposit Insurance Fund (“DIF”), which is administered by the FDIC. Deposits are insured up to the applicable limits by the FDIC, backed by the full faith and credit of the United States Government. Under current law, the basic deposit insurance limit is $250,000, with unlimited insurance coverage of non-interest-bearing transaction accounts beginning December 31, 2010, through December 31, 2012.

The FDIC assesses deposit insurance premiums on each FDIC-insured institution quarterly based on annualized rates for one of four risk categories applied to its deposits, subject to certain adjustments. Each

institution is assigned to one of four risk categories based on its capital, supervisory ratings and other factors. Well capitalized institutions that are financially sound with only a few minor weaknesses are assigned to Risk Category I. Risk Categories II, III and IV present progressively greater risks to the DIF. Under FDIC’s current risk-based assessment rules, the initial base assessment rates prior to adjustments range from 12 to 16 basis points for Risk Category I, and range from 22 basis points to 45 basis points for Risk Categories II – IV. Initial base assessment rates are subject to adjustments based on an institution’s unsecured debt, secured liabilities and brokered deposits, such that the total base assessment rates after adjustments range from 7 to 24 basis points for Risk Category I, and 17 to 77.5 basis points for Risk Categories II – IV.

In addition to the regular quarterly assessments, due to losses and projected losses attributed to failed institutions, in May 2009 the FDIC imposed a special assessment of 5 basis points on the amount of each depository institution’s assets reduced by the amount of its Tier 1 capital (not to exceed 10 basis points of its assessment base for regular quarterly premiums) as of June 30, 2009, which was collected on September 30, 2009. The Company’s deposit insurance expense during 2009 included $1.9 million recognized in the second quarter related to the special assessment.

In November 2009, as a result of a decline in the reserve ratio (the ratio of the net worth of the DIF to estimated insured deposits) and concerns about expected failure costs and available liquid assets in the DIF, the FDIC adopted a rule requiring each insured institution to prepay on December 30, 2009 the estimated amount of its quarterly assessments for the fourth quarter of 2009 and all quarters through the end of 2012 (in addition to the regular quarterly assessment for the third quarter due on December 30, 2009). The prepaid amount is recorded as an asset with a zero risk weight and each institution will continue to record quarterly expenses for deposit insurance. If events cause actual assessments during the prepayment period to vary from the prepaid amount, institutions will pay excess assessments in cash, or receive a rebate of prepaid amounts not exhausted after collection of assessments due on June 13, 2013, as applicable. Collection of the prepayment does not preclude the FDIC from changing assessment rates or revising the risk-based assessment system in the future. In December 2009, we paid $20.2 million in prepaid risk-based assessments, which included $1.2 million related to the fourth quarter of 2009 that would have otherwise been payable in the first quarter of 2010. Prepaid deposit insurance of approximately $15.0 million and $19.0 million was included in other assets in the accompanying consolidated balance sheets as of December 31, 2010 and 2009, respectively.

In November 2010, the Board of Directors of the FDIC approved the Dodd-Frank rule that requires the base on which assessments are charged be revised from one based on deposits to one based on consolidated assets less tangible capital. This change will become effective April 1, 2011.

FDIC insurance expense totaled $5.7 million, $7.8 million and $489,000 in 2010, 2009 and 2008, respectively. FDIC insurance expense includes deposit insurance assessments as well as Financing Corporation (“FICO”) assessments. All FDIC-insured depository institutions must pay an annual FICO assessment to provide funds for the payment of interest on bonds issued by FICO during the 1980s to resolve the thrift bailout. FDIC-insured depository institutions paid an average of 1.04 basis points on assessable deposits in 2010.

Fiscal and Monetary Policies

The Company’s business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. The Company is particularly affected by the policies of the Federal Reserve Board, which regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the Federal Reserve Board are (a) conducting open market operations in United States government securities, (b) changing the discount rates of borrowings of depository institutions, (c) imposing or changing reserve requirements against depository institutions’ deposits, and (d) imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the Federal Reserve Board may have a material effect on the Company’s business, results of operations and financial condition.

Privacy Provisions of the GLB Act

Federal banking regulators, as required under the GLB Act, have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.

Regulation of Securities Activities of Banks

The GLB Act also amended the federal securities laws to eliminate the blanket exceptions that banks traditionally have had from the definition of “broker” and “dealer”, but provided for certain transactional activities that would not be considered “brokerage” activities, which banks could effect without having to register as a broker. In September 2007, the Federal Reserve Board and the SEC approved Regulation R to clarify the permissible bank securities activities that can be conducted under the transactional exceptions provided by the GLB Act. Regulation R provides exceptions for networking arrangements with third party broker-dealers and authorizes compensation for bank employees who refer bank customers to such broker-dealers. The rules also provide exemptions to banks for effecting securities transactions in a trustee or fiduciary capacity, for sweeping funds into certain money market funds, and for accepting orders to effect securities transactions for custody accounts. Banks that conduct activities outside the exceptions provided by Regulation R had until the first day of their first fiscal year that commences after September 30, 2008 to either register as a broker-dealer or “push out” their brokerage activities to affiliated broker-dealers. Regulation R did not have an effect on the current securities activities that the Bank currently conducts for customers.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) implemented a broad range of corporate governance and accounting measures to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of disclosures under federal securities laws. The Company is subject to Sarbanes-Oxley because it is required to file periodic reports with the SEC under the Securities and Exchange Act of 1934. Among other things, Sarbanes-Oxley and/or its implementing regulations have established new membership requirements and additional responsibilities for the Company’s audit committee, imposed restrictions on the relationship between the Company and its outside independent auditors (including restrictions on the types of non-audit services the Company’s independent auditors may provide to it), imposed additional responsibilities for the Company’s external financial statements on its chief executive officer and chief financial officer, expanded the disclosure requirements for corporate insiders, required management to evaluate the Company’s disclosure controls and procedures and its internal control over financial reporting, and required its auditors to issue a report on the Company’s internal control over financial reporting. The NASDAQ has imposed a number of new corporate governance requirements as well.

Patriot Act

The USA Patriot Act of 2001 (the “Patriot Act”) is intended to strengthen the ability of U.S. law enforcement agencies and intelligence communities to work together to combat terrorism on a variety of fronts. The Patriot Act substantially broadened the scope of the U.S. anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. The U.S. Treasury Department has issued a number of implementing regulations which apply various requirements of the Patriot Act to financial institutions such as the Bank. Those regulations impose new obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing, and has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer

of money. The Patriot Act also requires federal bank regulators to evaluate the effectiveness of an applicant in combating money laundering in determining whether to approve a proposed bank acquisition.

Office of Foreign Asset Control

The Company and BancFirst, like all United States companies and individuals, are prohibited from transacting business with certain individuals and entities named on the Office of Foreign Asset Control’s list of Specially Designated Nationals and Blocked Persons. Failure to comply may result in fines and other penalties. The Office of Foreign Asset Control has issued guidance directed at financial institutions in which it asserts that it may, in its discretion, examine institutions determined to be high-risk or to be lacking in their efforts to comply with these prohibitions.

Financial Reform

The Dodd-Frank Act

In July 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). This new law will significantly change the current bank regulatory structure and affect the lending, deposit, investment, trading and operating activities of financial institutions and their holding companies. The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations, and to prepare numerous studies and reports for Congress. The federal agencies are given significant discretion in drafting the implementing rules and regulations, and consequently, many of the details and much of the impact of the Dodd-Frank Act may not be known for many months or years.

While many provisions of the Dodd-Frank Act apply to banks with over $10 billion in assets, certain provisions of the Dodd-Frank Act are expected to have a near-term impact on the Company. Effective one year after the date of enactment is a provision of the Dodd-Frank Act that eliminates the federal prohibitions on paying interest on demand deposits, thus allowing businesses to have interest-bearing checking accounts. Depending on competitive responses, this significant change to existing law could have an adverse impact on the Company’s net interest margin. The Dodd-Frank Act also broadens the base for Federal Deposit Insurance Corporation insurance assessments. Assessments will now be based on the average consolidated total assets less tangible equity capital of a financial institution. The Dodd-Frank Act also permanently increases the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2009, and non-interest bearing transaction accounts have unlimited deposit insurance through December 31, 2012.

The Dodd-Frank Act will require publicly traded companies to give stockholders a non-binding vote on executive compensation and so-called “golden parachute” payments, and authorizes the SEC to promulgate rules that would allow stockholders to nominate their own candidates using a company’s proxy materials. The legislation also directed the Federal Reserve Board to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded or not. The Federal Reserve Board and FDIC released final guidance on incentive compensation during 2010.

The Dodd-Frank Act includes certain related provisions which are often referred to as the “Collins Amendment.” These provisions are intended to subject bank holding companies to the same capital requirements as their bank subsidiaries and to eliminate or significantly reduce the use of hybrid capital instruments, especially trust preferred securities, as regulatory capital. Under the Collins Amendment, trust preferred securities issued by a company, such as our company, with total consolidated assets of less than $15 billion before May 19, 2010 and treated as regulatory capital are grandfathered, but any such securities issued later are not eligible as regulatory capital. The banking regulators must develop regulations setting minimum risk-based and leverage capital requirements for holding companies and banks on a consolidated basis that are no less stringent than the generally applicable requirements in effect for depository institutions under the prompt corrective action regulations discussed above. The banking regulators also must seek to make capital standards countercyclical so

that the required levels of capital increase in times of economic expansion and decrease in times of economic contraction. The Act requires these new capital regulations to be adopted by the Federal Reserve in final form 18 months after the date of enactment of the Dodd-Frank Act (July 21, 2010).

The Dodd-Frank Act creates a new Consumer Financial Protection Bureau with broad powers to supervise and enforce consumer protection laws. The Consumer Financial Protection Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks and savings institutions, including the authority to prohibit “unfair, deceptive or abusive” acts and practices.

It is difficult to predict at this time what specific impact the Dodd-Frank Act and the yet to be written rules and regulations will have on community banks. However, it is expected that at a minimum they will increase the Company’s operating and compliance costs and could increase the Company’s interest expense.

Temporary Liquidity Guarantee Program

In November 2008, the Board of Directors of the FDIC adopted a final rule relating to the Temporary Liquidity Guarantee Program (“TLGP”). The TLGP was announced by the FDIC in October 2008, preceded by the determination of systemic risk by the Secretary of the Department of Treasury (after consultation with the President), as an initiative to counter the system-wide crisis in the nation’s financial sector. Under the TLGP, the FDIC will (i) guarantee, through the earlier of maturity or December 31, 2012, certain newly issued senior unsecured debt issued by participating institutions on or after October 14, 2008, and before October 31, 2009 and (ii) provide full FDIC deposit insurance coverage for noninterest-bearing transaction deposit accounts, NOW accounts paying less than 0.5% interest per annum and Interest on Lawyers Trust Accounts held at participating FDIC insured institutions through June 30, 2010 which was extended until December 31, 2010. The Company elected to participate in the full FDIC deposit insurance coverage for noninterest-bearing transaction deposit accounts only through June 30, 2010. The Company elected not to participate in the TLG Program from July to December 2010. The fee assessment for deposit insurance coverage was 10 basis points per quarter during 2009 on amounts in covered accounts exceeding $250,000. During the extension period in 2010, the fee assessment increased to 15 basis points per quarter for institutions that are in Risk Category 1 of the risk-based premium system. Deposit coverage going forward will be subject to provisions in the Dodd-Frank Act previously discussed.

Emergency Economic Stabilization Act of 2008

On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (the “EESA”) was signed into law. The EESA authorized the Treasury to access up to $700 billion to protect the U.S. economy and restore confidence and stability to the financial markets. One such program under the Treasury Department’s Troubled Asset Relief Program (“TARP”) was action by Treasury to make significant investments in U.S. financial institutions through the TARP Capital Purchase Program. The Treasury’s stated purpose for implementing the TARP Capital Purchase Program was to improve the capitalization of healthy institutions, which would improve the flow of credit to businesses and consumers, and boost the confidence of depositors, investors, and counterparties alike. All federal banking and thrift regulatory agencies encouraged eligible institutions to participate in the TARP Capital Purchase Program. The Company elected not to participate in the TARP Capital Purchase Program. Management believes that current capital sources are sufficient to support organic growth, acquisitions within our current market areas, cash dividends on our common stock and periodic stock repurchases.

State Regulation

BancFirst is an Oklahoma-chartered state bank. Accordingly, BancFirst’s operations are subject to various requirements and restrictions of Oklahoma state law relating to loans, lending limits, interest rates payable on deposits, investments, mergers and acquisitions, borrowings, dividends, capital adequacy, and other matters. However, Oklahoma banking law specifically empowers a state-chartered bank such as BancFirst to exercise the

same powers as are conferred upon national banks by the laws of the United States and the regulations and policies of the United States Comptroller of the Currency, unless otherwise prohibited or limited by the State Banking Commissioner or the State Banking Board. Accordingly, unless a specific provision of Oklahoma law otherwise provides, a state-chartered bank is empowered to conduct all activities that a national bank may conduct.

National banks are authorized by the GLB Act to engage, through “financial subsidiaries,” in any activity that is permissible for a financial holding company and any activity that the Secretary of the Treasury, in consultation with the Federal Reserve Board, determines is financial in nature or incidental to any such financial activity, except (1) insurance underwriting, (2) real estate development or real estate investment activities (unless otherwise permitted by law), (3) insurance company portfolio investments and (4) merchant banking. The authority of a national bank to invest in a financial subsidiary is subject to a number of conditions, including, among other things, requirements that the bank must be well managed and well capitalized (after deducting from the bank’s capital outstanding investments in financial subsidiaries). The GLB Act provides that state nonmember banks, such as BancFirst, may invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law), subject to the same conditions that apply to national bank investments in financial subsidiaries.

As a state nonmember bank, BancFirst is subject to primary supervision, periodic examination and regulation by the State Banking Board and the FDIC, and Oklahoma law provides that BancFirst must maintain reserves against deposits as required by the FDI Act. The Oklahoma State Bank Commissioner is authorized by statute to accept an FDIC examination in lieu of a state examination. In practice, the FDIC and the Oklahoma State Banking Department alternate examinations of BancFirst. If, as a result of an examination of a bank, the Oklahoma Banking Department determines that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the bank’s operations are unsatisfactory or that the management of the bank is violating or has violated any law or regulation, various remedies, including the remedy of injunction, are available to the Oklahoma Banking Department. Oklahoma law permits the acquisition of an unlimited number of wholly-owned bank subsidiaries so long as aggregate deposits at the time of acquisition in a multi-bank holding company do not exceed 20% of the total amount of deposits of insured depository institutions located in Oklahoma.

In addition to the provisions of the GLB Act that authorizes state nonmember banks to invest in financial subsidiaries (assuming they have the requisite investment authority under applicable state law) on the same conditions that apply to national banks, FDICIA provides that FDIC-insured state banks such as BancFirst may engage directly or through a subsidiary in certain activities that are not permissible for a national bank, if the activity is authorized by applicable state law, the FDIC determines that the activity does not pose a significant risk to the Bank Insurance Fund (“BIF”), and the bank is in compliance with its applicable capital standards.

Available Information

The Company maintains a website www.bancfirst.com. The Company provides copies of the most recently filed 10-K, 10-Q and proxy statement, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company electronically files the material with, or furnishes it to, the SEC. The website also provides links to the SEC’s website (http://www.sec.gov) where all of the Company’s filings with the SEC can be obtained immediately upon filing. You may also request a copy of the Company’s filings, at no cost, by writing or telephoning us at the following address:

BancFirst Corporation

101 N. Broadway

Oklahoma City, Oklahoma 73102

ATTENTION: Joe T. Shockley, Jr.

Executive Vice President

(405) 270-1086

Item 1a. Risk Factors

In the course of conducting our business operations, the Company and our subsidiaries are exposed to a variety of risks that are inherent to the financial services industry. The following discusses some of the key inherent risk factors that could affect our business and operations, as well as other risk factors which are particularly relevant to us in the current period of significant economic and market disruption. Other factors besides those discussed below or elsewhere in this report also could adversely affect our business and operations, and these risk factors should not be considered a complete list of potential risks that may affect the Company and our subsidiaries.

Risks Related to Our Industry

The current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations.

We currently are operating in a challenging and uncertain economic environment, both nationally and in the local markets that we serve. Financial institutions continue to be affected by sustained declines in the value of financial instruments and real estate values, and while we are taking steps to reduce our market and credit risk exposure, we nonetheless are affected by these issues in view of our retaining a securities portfolio and a loan portfolio consisting of commercial and residential construction loans, residential and commercial real estate loans and commercial and industrial loans. Possible declines in the value of our investment securities could result in our recording losses on the other-than-temporary impairment (“OTTI”) of securities, which would reduce our earnings and therefore our capital. Declines in real estate values and home sales, and an increase in the financial stress on borrowers stemming from an uncertain economic environment, including relatively high unemployment, continue to have an adverse effect on our borrowers or their customers, which could adversely impact the repayment of the loans we have made. The overall deterioration in economic conditions also could subject us to increased regulatory scrutiny. In addition, a prolonged recession, or further deterioration in local economic conditions, could result in further increases in loan delinquencies; increases in problem assets and foreclosures; and declines in the values of the collateral for our loans, which could reduce our customers’ borrowing power. Furthermore, a prolonged recession or further deterioration in local economic conditions could drive the level of loan losses beyond the level we have provided for in our loan loss allowance, which could necessitate an increase in our provision for loan losses, which, in turn, would reduce our earnings and capital. Additionally, the demand for our products and services could be reduced, which would adversely impact our liquidity and the level of revenues we generate.

There can be no assurance that actions of the U.S. Government, Federal Reserve and other governmental and regulatory bodies for the purpose of stabilizing the financial markets will achieve the intended effect.

Beginning in the fourth quarter of 2008, the U.S. government has responded to the ongoing financial crisis and economic slowdown by enacting new legislation and expanding or establishing a number of programs and initiatives. The U.S. Treasury, the FDIC and the Federal Reserve Board each have developed programs and facilities, including, among others, the TARP Capital Purchase Program, Dodd-Frank Act and other efforts, designed to increase inter-bank lending, improve funding for consumer receivables and restore consumer and counterparty confidence in the banking sector, as more particularly described in “Item 1. Business—Supervision and Regulation.” The final form of any such programs or initiatives or related legislation cannot be known at this time. There can be no assurance as to the impact that any such initiatives or governmental programs will have on the financial markets, including the high levels of volatility and limited credit availability. The failure of these efforts to stabilize the financial markets, the continuation or worsening of current financial market conditions or unintended long-term consequences of these programs or initiatives could materially and adversely affect our business, financial condition, results of operations, access to credit, or the trading price of our common stock and other equity and debt securities.

Fluctuations in interest rates could reduce our profitability.

We realize income primarily from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings. We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-earning assets will be more sensitive to changes in market interest rates than our interest-bearing liabilities, or vice versa. Changes in market interest rates could either positively or negatively affect our net interest income and our profitability, depending on the magnitude, direction and duration of the change. If interest rates remain low, our net interest margin could experience further compression.

We are unable to predict fluctuations of market interest rates, which are affected by, among other factors, changes in inflation rates, economic growth, money supply, government debt, domestic and foreign financial markets and political developments, including terrorist acts and acts of war. Our asset-liability management strategy, which is designed to mitigate our risk from changes in market interest rates, may not be able to mitigate changes in interest rates from having a material adverse effect on our results of operations and financial condition.

We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations.

We are subject to extensive regulation, supervision and examination by federal and state banking authorities. Any change in applicable regulations or federal or state legislation could have a substantial impact on us and our results of operations. Additional legislation and regulations may be enacted or adopted in the future that could significantly affect our powers, authority and operations, which could have a material adverse effect on our financial condition and results of operations. Further, regulators have significant discretion and power to prevent or remedy unsafe or unsound practices or violations of laws by banks and bank holding companies in the performance of their supervisory and enforcement duties. The exercise of regulatory power may have a negative impact on our results of operations and financial condition.

We may be required to pay significantly higher FDIC deposit insurance premiums and assessments in the future.

During 2008 and continuing in 2009, higher levels of bank failures have dramatically increased resolution costs of the FDIC and depleted the DIF. In addition, the Dodd-Frank Act has permanently increased the maximum amount of deposit insurance for banks, savings institutions and credit unions to $250,000 per depositor, retroactive to January 1, 2009, and non-interest bearing transaction accounts have unlimited deposit insurance through December 31, 2012. These programs have placed additional stress on the DIF. In order to maintain a strong funding position and restore reserve ratios of the DIF, the FDIC has increased assessment rates of insured depository institutions. In addition, on November 12, 2009, the FDIC adopted a rule requiring banks to prepay three years’ worth of estimated deposit insurance premiums by December 31, 2009. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If additional bank or financial institution failures continue or increase, or if the cost of resolving prior failures exceeds expectations, we may be required to pay even higher FDIC premiums than these recently increased levels. These announced increases and any future increases or required prepayments of FDIC insurance premiums may adversely impact our earnings and financial condition.

Our FDIC insurance related costs were $5.7 million for the year ended December 31, 2010 compared with $7.8 million and $489,000 for the years ended December 31, 2009 and 2008, respectively. We are unable to predict the impact in future periods; including whether and when additional special assessments will occur, in the event the economic crisis continues.

Tax law changes may adversely affect our net income, effective tax rate and our overall results of operations and financial condition.

The Company’s financial performance is impacted by federal and state tax laws. Given the current economic and political environment, and ongoing state budgetary pressures, the enactment of new federal or state tax legislation may occur. The enactment of such legislation, or changes in the interpretation of existing law, including provisions impacting tax rates, apportionment, consolidation or combination, income, expenses, and credits, may have a material adverse effect on the Company’s financial condition and results of operations.

Recently enacted regulatory reforms could have a significant impact on our business, financial

condition and results of operations.

Recently enacted and proposed changes in the laws and regulations affecting public companies or financial institutions could cause us to incur increased costs as we evaluate the implications of new rules and respond to new requirements. We continue to evaluate and monitor developments with respect to these new and proposed rules, and we cannot predict or estimate the amount of the additional costs, if any, we may incur or the timing of such costs.

On July 21, 2010, President Obama signed into law the Dodd-Frank Act. The Dodd-Frank Act represents a significant overhaul of many aspects of the regulation of the financial-services industry, addressing, among other things, systemic risk, capital adequacy, deposit insurance assessments, consumer financial protection, interchange fees, derivatives, lending limits, and changes among the bank regulatory agencies. Many of these provisions are subject to further study, rulemaking, and the discretion of regulatory bodies, such as the Financial Stability Oversight Council, which will regulate the systemic risk of the financial system. While the provisions of the Act receiving the most public attention have generally been those more likely to affect larger institutions with assets over $10 billion, the Dodd-Frank Act also contains many provisions which will affect smaller institutions such as ours in substantial ways. Compliance with the Dodd-Frank Act’s provisions may curtail our revenue opportunities, increase our operating costs, require us to hold higher levels of regulatory capital or liquidity or both or otherwise adversely affect our business or financial results in the future. Our management is actively reviewing the provisions of the Dodd-Frank Act and assessing its probable impact on our business, financial condition, and results of operations. However, because many aspects of the Dodd-Frank Act are subject to future rulemaking, it is difficult to precisely anticipate its overall financial impact on the Company at this time.

Changes in monetary policies may have an adverse effect on our business.

Our results of operations are affected by credit policies of monetary authorities, particularly the Federal Reserve. Actions by monetary and fiscal authorities, including the Federal Reserve, could have an adverse effect on our deposit levels, loan demand or business earnings. See “Item 1—Business-Supervision and Regulation.”

Risks Related to Our Business

Our recent results may not be indicative of future results.

We may not be able to sustain our historical rate of growth or may not be able to grow our business at all. Various factors, such as poor economic conditions, changes in interest rates, regulatory and legislative considerations and competition may also impede or inhibit our ability to expand our market presence. If we experience a significant decrease in our rate of growth, our results of operations and financial condition may be adversely affected due to a high percentage of our operating costs being fixed expenses.

If a significant number of customers fail to perform under their loans, our business, profitability, and financial condition would be adversely affected.

As a lender, we face the risk that a significant number of our borrowers will fail to pay their loans when due. If borrower defaults cause losses in excess of our allowance for loan losses, it could have an adverse effect on our

business, profitability, and financial condition. We have established an evaluation process designed to recognize loan losses as they occur. While this evaluation process uses historical and other objective information, the classification of loans and the estimation of loan losses are dependent to a great extent on our experience and judgment. If charge-offs in future periods exceed the allowance for possible loan losses, we will need additional provisions to increase the allowance for possible loan losses. Any increases in the allowance for possible loan losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our financial condition and results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” located elsewhere in this report for further discussion related to our process for determining the appropriate level of the allowance for possible loan losses. We cannot assure you that our future loan losses will not have any material adverse effects on our business, profitability or financial condition.

Adverse changes in economic conditions, especially in the State of Oklahoma, could have a material adverse effect on our business, growth, and profitability.

Our bank subsidiary operates exclusively within the State of Oklahoma and, unlike larger national or superregional banks that serve a broader and more diverse geographic region; our lending is also primarily concentrated in the State of Oklahoma. As a result, our financial condition, results of operations and cash flows are subject to changes in the economic conditions in such state. Our continued success is largely dependent upon the continued growth or stability of the communities we serve. A decline in the economies of these communities could negatively impact our net income and profitability. Additionally, declines in the economies of these communities and of the State of Oklahoma in general could affect our ability to generate new loans or to receive repayments of existing loans, and our ability to attract new deposits, adversely affecting our financial condition.

The soundness of other financial institutions could have a material adverse effect on our business, growth, and profitability.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose our business to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due to us. Any such losses could have a material adverse effect on our financial condition and results of operations.

Competition with other financial institutions could adversely affect our profitability.

We face vigorous competition from banks and other financial institutions, including savings and loan associations, savings banks, finance companies and credit unions. Certain of these banks and other financial institutions have substantially greater resources and lending limits, larger branch systems and other banking services that we do not offer. To a limited extent, we also compete with other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies. When new competitors seek to enter one of our markets, or when existing market participants seek to increase their market share, they sometimes undercut the pricing and/or credit terms prevalent in that market. This competition may reduce or limit our margins on banking and trust services, reduce our market share and adversely affect our results of operations and financial condition. If Regulation Q is repealed and financial institutions are allowed to pay interest on commercial demand deposits, competitive pressures would cause our subsidiary bank to pay interest on demand deposits. Since we have a higher than average level of commercial demand deposits, paying interest on commercial demand deposits would have a negative impact on our net interest margin.

Our concentration of real estate loans is subject to the local real estate market in which we operate.

Loans secured by real estate have been a large portion of our loan portfolio. At December 31, 2010, this percentage was 62.6% compared to 60.4% at December 31, 2009. While our record of asset quality has

historically been solid, we cannot guarantee that our record of asset quality will be maintained in future periods. Although we were not, and are not, involved in subprime lending, the ramifications of the subprime lending crisis and the turmoil in the financial and capital markets that followed have been far-reaching, with real estate values declining and unemployment and bankruptcies rising throughout the nation, including the region we serve. The ability of our borrowers to repay their loans could be adversely impacted by the significant change in market conditions, which not only could result in our experiencing an increase in charge-offs, but also could necessitate increasing our provision for loan losses. In addition, because multi-family and commercial real estate (“CRE”) loans represent the majority of our real estate loans outstanding, a decline in tenant occupancy due to such factors or for other reasons could adversely impact the ability of our borrowers to repay their loans on a timely basis, which could have a negative impact on our financial condition and results of operations.

We rely heavily on our management team, and the unexpected loss of key managers may adversely affect our operations.

Our success to-date has been strongly influenced by our ability to attract and to retain senior management experienced in banking and financial services. Our ability to retain executive officers and the current management teams of each of our lines of business will continue to be important to successful implementation of our strategies. We do not have employment or non-compete agreements with these key employees. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results.

Our information systems may experience an interruption or breach in security.

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of our information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of our information systems could damage our reputation, result in a loss of customer business, and subject us to additional regulatory scrutiny or civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

We rely on certain external vendors.

We are reliant upon certain external vendors to provide products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements could be disruptive to our operations, which could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

We are subject to environmental liability risk associated with lending activities.

A significant portion of our loan portfolio is secured by real property. During the ordinary course of business, we may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, we may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure

action on real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations.

There can be no assurance that the integration of our acquisitions will be successful or will not result in unforeseen difficulties that may absorb significant management attention.

Our completed acquisitions, or any future acquisition, may not produce the revenue, cost savings, earnings or synergies that we anticipated. The process of integrating acquired companies into our business may also result in unforeseen difficulties. Unforeseen operating difficulties may absorb significant management attention, which we might otherwise devote to our existing business. Also, the process may require significant financial resources that we might otherwise allocate to other activities, including the ongoing development or expansion of our existing operations.

If we pursue a future acquisition, our management could spend a significant amount of time and effort identifying and completing the acquisition. If we make a future acquisition, we could issue equity securities which would dilute current stockholders’ percentage ownership, incur substantial debt, assume contingent liabilities, incur a one-time charge or be required to record an impairment of goodwill, or any combination of the foregoing.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management and our auditors to evaluate and assess the effectiveness of our internal control over financial reporting. These Sarbanes-Oxley requirements may be modified, supplemented or amended from time to time. Implementing these changes may take a significant amount of time and may require specific compliance training of our personnel. We have in the past discovered, and may in the future discover, areas of our internal control over financial reporting that need improvement. If we or our auditors discover a material weakness, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and have an adverse effect on our stock price. We may not be able to effectively and timely implement necessary control changes and employee training to ensure continued compliance with the Sarbanes-Oxley Act and other regulatory and reporting requirements. Our historic growth and our planned expansion through acquisitions present challenges to maintaining the internal control and disclosure control standards applicable to public companies. If we fail to maintain effective internal controls we could be subject to regulatory scrutiny and sanctions, our ability to recognize revenue could be impaired and investors could lose confidence in the accuracy and completeness of our financial reports. We cannot assure you that we will continue to fully comply with the requirements of the Sarbanes-Oxley Act or that management or our auditors will conclude that our internal control over financial reporting is effective in future periods.

Maintaining or increasing our market share depends on market acceptance and regulatory approval of new products and services.

Our success depends, in part, upon our ability to adapt our products and services to evolving industry standards and consumer demand. There is increasing pressure on financial services companies to provide products and services at lower prices. In addition, the widespread adoption of new technologies, including Internet-based services, could require us to make substantial expenditures to modify or adapt our existing products or services. A failure to achieve market acceptance of any new products we introduce, or a failure to introduce products that the market may demand, could have an adverse effect on our business, profitability, or growth prospects.

We have businesses other than banking.

In addition to commercial banking services, we provide life and other insurance products, as well as other business and financial services. We may in the future develop or acquire other non-banking businesses. As a result of other such businesses, our earnings could be subject to risks and uncertainties that are different from those to which our commercial banking services are subject.

We have a continuing need for technological change.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend in part upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our market area. Many of our larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or superior products to those that we will be able to offer, which would put us at a competitive disadvantage. Accordingly, we cannot assure you that we will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers.

We may need to raise additional capital in the future, and such capital may not be available when needed or at all.

We may need to raise additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and business needs, particularly if our asset quality or earnings were to deteriorate significantly. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve.

We cannot assure that such capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors or counterparties participating in the capital markets, or a downgrade of our debt ratings, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Moreover, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our businesses, financial condition and results of operations.

Risks Associated with Our Common Stock

Our stock price can be volatile.

Investors should carefully consider the risks described in this “Risk Factors” section and the other information in this report, including our consolidated financial statements with related notes and documents incorporated by reference. If any of these risks or other risks, which have not been identified or which we may believe are immaterial or unlikely, actually occur, our business, financial condition and results of operations could be harmed. Stock price volatility may make it more difficult for you to resell your common stock when you want and at prices you find attractive. Our stock price can fluctuate significantly in response to a variety of factors including, among other things: actual or anticipated variations in quarterly results of operations; recommendations by securities analysts; operating and stock price performance of other companies that investors deem comparable to us; news reports relating to trends, concerns and other issues in the financial services industry; perceptions in the marketplace regarding us and/or our competitors; new technology used, or services

offered, by competitors; significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; failure to integrate acquisitions or realize anticipated benefits from acquisitions; changes in government regulations; and geopolitical conditions such as acts or threats of terrorism or military conflicts.

General market fluctuations, industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, interest rate changes or credit loss trends, could also cause our stock price to decrease regardless of operating results.

We may not continue to pay dividends on our common stock in the future.

We have historically paid a common stock dividend. However, BancFirst Corporation is a bank holding company, and our ability to declare and pay dividends is dependent on certain federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends. In the current stressed financial markets and declining economy, which has resulted in higher FDIC insurance premiums and special assessments on FDIC-insured financial institutions, including the Bank, there can be no certainty that our common dividend will continue to be paid at the current levels. It is possible that our common dividend could be reduced or even cease to be paid. In such case, the trading price of our common stock could decline, and investors may lose all or part of their investment.

An investment in our common stock is not an insured deposit.

Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in our common stock is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this report and is subject to the same market forces that affect the price of common stock in any company. As a result, if you acquire our common stock, you could lose some or all of your investment.

Our directors and executive officers own a significant portion of our common stock and can influence shareholder decisions.

Our directors and executive officers, as a group, beneficially owned approximately 53% of our outstanding common stock as of February 28, 2011. As a result of their ownership, the directors and executive officers have the ability, by voting their shares in concert, to influence the outcome of any matter submitted to our shareholders for approval, including the election of directors. The directors and executive officers may vote to cause us to take actions with which our other shareholders do not agree.

Our stockholder rights plan, amended and restated certificate of incorporation, as well as provisions of Oklahoma law, could make it difficult for a third party to acquire our company.

We have a stockholder rights plan that may have the effect of discouraging unsolicited takeover proposals. The rights issued under the stockholder rights plan would cause substantial dilution to a person or group that attempts to acquire us on terms not approved in advance by our board of directors. In addition, Oklahoma corporate law and our amended and restated certificate of incorporation contain provisions that could delay, deter or prevent a change in control of our company or our management. Together, these provisions may discourage transactions that otherwise could provide for the payment of a premium over prevailing market prices of our common stock, and also could limit the price that investors are willing to pay in the future for shares of our common stock.

The trading volume in our common stock is less than that of other larger financial services companies.

Although our common stock is listed for trading on the NASDAQ Global Select Market, the trading volume in our common stock is less than that of other, larger financial services companies. A public trading market

having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Given the lower trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause our stock price to fall.

Item 1b. Unresolved Staff Comments.

None.

Item 2. Properties.

The principal offices of the Company are located at 101 North Broadway, Oklahoma City, Oklahoma 73102. The Company owns substantially all of the properties and buildings in which its various offices and facilities are located. These properties include the main bank, a technology and operations center, 90 branches and two subsidiary banks. BancFirst also owns properties for future expansion. There are no significant encumbrances on any of these properties. (See Note (6), “Premises and Equipment, Net” to the Consolidated Financial Statements for further information on the Company’s properties).

Item 3. Legal Proceedings.

The Company has been named as a defendant in various legal actions arising from the conduct of its normal business activities. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in the opinion of the Company, any such liability will not have a material adverse effect on the consolidated financial position or results of operations of the Company.

Item 4. Reserved.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock Market Prices and Dividends

The Company’s Common Stock is listed on the NASDAQ Global Select Market System (“NASDAQ/GS”) and is traded under the symbol “BANF”. The following table sets forth, for the periods indicated, (i) the high and low sales prices of the Company’s Common Stock as reported in the NASDAQ/GS consolidated transaction reporting system and (ii) the quarterly dividends per share declared on the Common Stock.


	Price Range
	High		Low		Cash Dividends Declared
2010
Fourth Quarter	$	43.58	$	39.70	$	0.25
Third Quarter	$	41.88	$	34.87	$	0.25
Second Quarter	$	47.15	$	36.23	$	0.23
First Quarter	$	44.20	$	35.58	$	0.23

2009
Fourth Quarter	$	38.95	$	35.13	$	0.23
Third Quarter	$	39.96	$	31.47	$	0.23
Second Quarter	$	45.59	$	34.46	$	0.22
First Quarter	$	53.80	$	29.05	$	0.22

As of February 28, 2011 there were 333 holders of record of the Common Stock.

BancFirst Corporation is a legal entity separate and distinct from the Bank, and its ability to pay dividends is substantially dependent upon dividend payments received from the Bank. Various laws, regulations and regulatory policies limit the Bank’s ability to pay dividends to BancFirst Corporation, as well as BancFirst Corporation’s ability to pay dividends to its shareholders. See “Liquidity and Funding” and “Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Business—Supervision and Regulation” and Note (15) of the Notes to Consolidated Financial Statements for further information regarding limitations on the payment of dividends by BancFirst Corporation and the Bank.

Stock Repurchases

In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”). 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 must be approved by the Company’s Executive Committee. During the three months ended December 31, 2010, no purchases of the Company’s common stock were made by the Company nor any “affiliated purchaser” (as defined in Rule 10b-18 (a)(3) under the Securities Exchange Act of 1934). At December 31, 2010 there were 543,900 shares remaining that could be repurchased under the Company’s November 1999 Stock Repurchase Program. The amount approved is subject to amendment. The Stock Repurchase Program will remain in effect until all shares are repurchased.

Performance Graph

The Company performance graph is incorporated by reference from “Company Performance” contained on page A-67 of the attached Appendix.

Item 6. Selected Financial Data.

Incorporated by reference from “Selected Consolidated Financial Data” contained on page A-2 through A-3 of the attached Appendix.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Incorporated by reference from “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained on pages A-4 through A-24 of the attached Appendix.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Incorporated by reference from “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk” contained on page A-23 through A-24 of the attached Appendix.

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements of BancFirst Corporation and its subsidiaries, are incorporated by reference from pages A-26 through A-66 of the attached Appendix, and include the following:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income and Comprehensive Income

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flow

Notes to Consolidated Financial Statements

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. 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, Treasurer, 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 last fiscal quarter of 2010 that materially affected, or are likely to materially affect, the Company’s internal control over financial reporting. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation.

Management’s annual report on internal control over financial reporting is incorporated by reference from page A-25 of the attached Appendix. The independent registered public accounting firm’s report on the Company’s internal control over financial reporting is incorporated by reference from page A-26 of the attached Appendix.

Item 9B. Other Information.

There is no information required to be disclosed in a report on Form 8-K during the fourth quarter of the year that was not reported.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by Item 401 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Election of Directors” and is hereby incorporated by reference. The information required by Item 405 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Compliance with Section 16(a) of the Securities Exchange Act of 1934” and is hereby incorporated by reference. The information required by Item 406 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Code of Ethics” and is hereby incorporated by reference.

Item 11. Executive Compensation.

The information required by Item 402 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Compensation of Directors and Executive Officers” and “Compensation Discussion and Analysis” and is hereby incorporated by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

The information required by Item 201(d) of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Securities Authorized for Issuance under Equity Compensation Plans” and is hereby

incorporated by reference. The information required by Item 403 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” and is hereby incorporated by reference.

Item 13. Certain Relationships and Related Transactions and Director Independence.

The information required by Item 404 of Regulation S-K will be contained in the 2011 Proxy Statement under the caption “Transactions with Related Persons” and is hereby incorporated by reference.

Item 14. Principal Accountant Fees and Services.

The information required by Item 9(e) of Schedule 14A will be contained in the 2011 Proxy Statement under the caption “Ratification of Selection of Independent Registered Public Accounting Firm” and is hereby incorporated by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this report:

(1) Financial Statements:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2010 and 2009

Consolidated Statements of Income and Comprehensive Income for the three years ended December 31, 2010, 2009 and 2008

Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2010, 2009 and 2008

Consolidated Statements of Cash Flow for the three years ended December 31, 2010, 2009 and 2008

Notes to Consolidated Financial Statements

The above financial statements are incorporated by reference from pages A-26 through A-66 of the attached Appendix.

(2) All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(3) The following Exhibits are filed with this Report or are incorporated by reference as set forth below:


Exhibit Number		Exhibit
3.1		Second Amended and Restated Certificate of Incorporation of BancFirst Corporation (filed as Exhibit 1 to the Company’s 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).


Exhibit Number		Exhibit
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 Article XVI, Section 1 and Article XVII, Section 1 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		Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including as 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 4.1 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).

4.3		Amendment No. 1 to Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent (filed as Exhibit 4.2 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).

4.4		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 Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

4.5		Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (filed as Exhibit D to Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

4.6		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 dated February 4, 2004, and incorporated herein by reference).

4.7		Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (filed as Exhibit 4.2 on Form S-3 to the Company’s registration statement, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).

4.8		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/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

4.9*		Form of Indenture relating to the Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures, Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture, and Form of Certificate to Trustee.

10.1		Ninth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.2		Amended and Restated BancFirst Corporation Employee Stock Ownership and Thrift Plan, as amended by amendments dated September 19, 1992, November 21, 2002 and December 18, 2003 (filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and incorporated herein by reference).


Exhibit Number		Exhibit
10.3		Second Amended and Restated BancFirst Corporation Non-Employee Directors’ Stock Option Plan (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.4		Third Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.5		Amendment to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement adopted June 25, 2009 (filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.6		Amended and Restated BancFirst Corporation Thrift Plan adopted March 25, 2010 effective January 1, 2010 (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.7		Amendment (Code Section 415 Compliance) to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted July 23, 2009 (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.8		Amendment (Pension Protection Act, HEART Act and the Worker, Retiree, and Employer Recovery Act) to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted December 17, 2009 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.9*		Amendment to the Amended and Restated BancFirst Corporation Thrift Plan adopted December 16, 2010 effective January 1, 2011.

21.1*		Subsidiaries of Registrant.

23.1*		Consent of Independent Registered Public Accounting Firm.

31.1*		Chief Executive Officer’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31.2*		Chief Financial Officer’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.

*	Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


March 15, 2011				BANCFIRST CORPORATION

				/s/ David E. Rainbolt
				David E. Rainbolt
				President and Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 15, 2011.



/s/ H. E. Rainbolt				/s/ David E. Rainbolt
H. E. Rainbolt				David E. Rainbolt
Chairman of the Board				President, Chief Executive Officer and Director
(Principal Executive Officer)				(Principal Executive Officer)

/s/ Dennis L. Brand				/s/ C. L. Craig, Jr.
Dennis L. Brand				C. L. Craig, Jr.
Chief Executive Officer, BancFirst and Director				Director
(Principal Executive Officer)

/s/ William H. Crawford				/s/ James R. Daniel
William H. Crawford				James R. Daniel
Director				Vice Chairman of the Board
				(Principal Executive Officer)

/s/ F. Ford Drummond				/s/ K. Gordon Greer
F. Ford Drummond				K. Gordon Greer
Director				Vice Chairman of the Board
				(Principal Executive Officer)

/s/ Dr. Donald B. Halverstadt				/s/ William O. Johnstone
Dr. Donald B. Halverstadt				William O. Johnstone
Director				Vice Chairman of the Board
				(Principal Executive Officer)

/s/ J. Ralph McCalmont				/s/ Tom H. McCasland, III
J. Ralph McCalmont				Tom H. McCasland, III
Director				Director

/s/ Ronald J. Norick
Ronald J. Norick				Paul B. Odom, Jr.
Director				Director



				/s/ Cynthia S. Ross
David Ragland				Cynthia S. Ross
Director				Director

/s/ G. Rainey Williams, Jr.				/s/ Michael K. Wallace
G. Rainey Williams, Jr.				Michael K. Wallace
Director				Director

/s/ Randy Foraker				/s/ Joe T. Shockley, Jr.
Randy Foraker				Joe T. Shockley, Jr.
Executive Vice President and Chief Risk Officer				Executive Vice President and Chief Financial Officer
(Principal Accounting Officer)				(Principal Financial Officer)

APPENDIX A

BancFirst Corporation

INDEX TO FINANCIAL STATEMENTS


		Pages
Selected Consolidated Financial Data		A-2 to A-3

Management’s Discussion and Analysis of Financial Condition and Results of Operations		A-4 to A-24

Management’s Report on Internal Control Over Financial Reporting		A-25

Reports of Independent Registered Public Accounting Firm		A-26 to A-27

Consolidated Balance Sheets		A-28

Consolidated Statements of Income and Comprehensive Income		A-29

Consolidated Statements of Stockholders’ Equity		A-30

Consolidated Statements of Cash Flow		A-31

Notes to Consolidated Financial Statements		A-32 to A-66

Company Performance		A-67

A-1

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain historical consolidated financial data as of and for the five years ended December 31, 2010. The historical consolidated financial data has been derived from our audited consolidated financial statements. The historical consolidated financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our audited consolidated financial statements and the related notes included elsewhere in this report.


	At and for the Year Ended December 31,
	2010			2009			2008			2007			2006
	(Dollars in thousands, except per share data)
Income Statement Data
Net interest income	$	142,776		$	131,321		$	139,107		$	148,286		$	143,688
Provision for loan losses		2,954			10,389			10,676			3,329			1,790
Noninterest income		69,919			66,864			74,385			71,138			58,424
Noninterest expense		144,095			139,117			135,006			134,446			124,557
Net income		42,309			32,609			44,358			53,093			49,352
Balance Sheet Data
Total assets	$	5,060,249		$	4,416,115		$	3,867,204		$	3,743,006		$	3,418,574
Securities		746,343			417,172			455,568			467,719			432,910
Total loans (net of unearned interest)		2,811,964			2,738,654			2,757,854			2,487,099			2,325,548
Allowance for loan losses		35,745			36,383			34,290			29,127			27,700
Deposits		4,503,754			3,929,016			3,377,608			3,288,504			2,974,305
Long-term borrowings		34,265			—			—			606			1,339
Junior subordinated debentures		28,866			26,804			26,804			26,804			51,804
Stockholders’ equity		458,594			430,750			413,791			371,962			348,355
Per Common Share Data
Net income—basic	$	2.76		$	2.13		$	2.91		$	3.41		$	3.14
Net income—diluted		2.70			2.09			2.85			3.33			3.07
Cash dividends		0.96			0.90			0.84			0.76			0.68
Book value		29.84			28.14			27.08			24.44			22.10
Tangible book value		26.19			25.41			24.34			21.66			19.57
Selected Financial Ratios
Performance ratios:
Return on average assets		0.92	%		0.78	%		1.17	%		1.49	%		1.46	%
Return on average stockholders’ equity		9.45			7.70			11.30			14.66			15.10
Cash dividend payout ratio		34.78			42.25			28.87			22.29			21.73
Net interest spread		3.06			2.97			3.31			3.59			3.80
Net interest margin		3.37			3.42			4.05			4.63			4.75
Efficiency ratio		67.75			70.20			63.24			61.27			61.63
Balance Sheet Ratios:
Average loans to deposits		67.58	%		74.57	%		78.82	%		76.04	%		79.19	%
Average earning assets to total assets		92.74			92.56			91.23			90.86			90.20
Average stockholders’ equity to average assets		9.74			10.15			10.35			10.18			9.68
Asset Quality Ratios:
Nonperforming and restructured loans to total loans		1.00	%		1.46	%		0.86	%		0.54	%		0.51	%
Nonperforming and restructured assets to total assets		1.01			1.13			0.72			0.40			0.40
Allowance for loan losses to total loans		1.27			1.33			1.24			1.17			1.19
Allowance for loan losses to nonperforming and restructured loans		127.25			91.06			144.52			215.57			231.41
Net chargeoffs to average loans		0.13			0.30			0.21			0.08			0.09

A-2

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS

Taxable Equivalent Basis (Dollars in thousands)


	December 31, 2010								December 31, 2009								December 31, 2008
	Average Balance			Interest Income/ Expense		Average Yield/ Rate			Average Balance			Interest Income/ Expense		Average Yield/ Rate			Average Balance			Interest Income/ Expense		Average Yield/ Rate
ASSETS
Earning assets:
Loans (1)	$	2,761,986		$	155,131		5.62	%	$	2,749,544		$	153,059		5.57	%	$	2,612,553		$	172,556		6.59	%
Securities—taxable		481,783			12,378		2.57			379,702			13,436		3.54			416,587			16,387		3.92
Securities—tax exempt		36,228			1,913		5.28			38,081			2,151		5.65			38,000			2,214		5.81
Federal funds sold and interest-bearing deposits with banks		982,059			2,474		0.25			695,167			2,241		0.32			385,825			7,864		2.03

Total earning assets		4,262,056			171,896		4.03			3,862,494			170,887		4.42			3,452,965			199,021		5.75

Nonearning assets:
Cash and due from banks		108,440								113,207								138,002
Interest receivable and other assets		261,521								233,885								225,879
Allowance for loan losses		(36,466	)							(36,607	)							(31,939	)

Total nonearning assets		333,495								310,485								331,942

Total assets	$	4,595,551							$	4,172,979							$	3,784,907

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	612,442			1,404		0.23	%	$	518,914			1,218		0.23	%	$	423,773			2,126		0.50	%
Savings deposits		1,424,252			12,215		0.86			1,228,697			15,513		1.26			1,100,184			24,945		2.26
Time deposits		838,589			12,462		1.49			885,403			19,777		2.23			834,712			29,313		3.50
Short-term borrowings		3,099			6		0.19			2,883			11		0.38			21,322			458		2.14
Long-term borrowings		3,129			61		1.95			—			—		—			218			9		4.12
Junior subordinated debentures		27,284			1,993		7.30			26,804			1,966		7.33			26,738			1,966		7.33

Total interest-bearing liabilities		2,908,795			28,141		0.97			2,662,701			38,485		1.45			2,406,947			58,817		2.44

Interest-free funds:
Noninterest-bearing deposits		1,211,712								1,054,291								955,847
Interest payable and other liabilities		27,487								32,239								30,537
Stockholders’ equity		447,557								423,748								391,576

Total interest free-funds		1,686,756								1,510,278								1,377,960

Total liabilities and stockholders’ equity	$	4,595,551							$	4,172,979							$	3,784,907

Net interest income				$	143,755							$	132,402							$	140,204

Net interest spread							3.06	%							2.97	%							3.31	%

Net interest margin							3.37	%							3.42	%							4.05	%

(1)	Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis presents factors that the Company believes are relevant to an assessment and understanding of the Company’s financial position and results of operations for the three years ended December 31, 2010. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto and the selected consolidated financial data included herein.

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.

SUMMARY

BancFirst Corporation’s net income for 2010 was $42.3 million, or $2.70 per diluted share, compared to $32.6 million, or $2.09 per diluted share for 2009 and $44.4 million, or $2.85 per diluted share for 2008. The results for 2010, 2009 and 2008 include several one-time items that are more fully described below.

In 2010, net interest income was $142.8 million, compared to $131.3 million in 2009 and $139.1 million in 2008. The Company’s net interest margin was 3.37% for 2010 down 5 basis points from 3.42% in 2009 and down 68 basis points from 4.05% in 2008. The decrease in 2010 was due to the continued low interest rate environment and maturities of higher yielding fixed rate loans and securities partially offset by lower interest expense on deposits. Provision for loan losses was $3.0 million in 2010 compared to $10.4 million in 2009 and $10.7 million in 2008. Noninterest income was $69.9 million in 2010 compared to $66.9 million in 2009 and $74.4 million in 2008, while noninterest expense was $144.1 million in 2010 compared to $139.1 million in 2009 and $135.0 million in 2008.

Total assets at December 31, 2010 were $5.1 billion, up from $4.4 billion at December 31, 2009 and $3.9 billion at December 31, 2008. Total loans at December 31, 2010 were $2.8 billion versus $2.7 billion for 2009 and $2.8 billion for 2008. Total deposits increased to $4.5 billion from $3.9 billion for 2009 and $3.4 billion for 2008. The Company’s liquidity remains strong as its average loan-to-deposit ratio was 67.6% for 2010, compared to 74.6% for 2009 and 78.8% for 2008. Stockholders’ equity was $458.6 million, an increase of $27.8 million over a year ago, compared to $430.8 million for 2009 and $413.8 million for 2008. Average stockholders’ equity to average assets was 9.74% at December 31, 2010, compared to 10.15% at December 31, 2009 and 10.35% at December 31, 2008. The Company’s borrowings included no brokered deposits at December 31, 2010, 2009 or 2008.

Asset quality improved somewhat in 2010 after deteriorating from 2007 through 2009, as measured by a ratio of nonperforming and restructured assets to total assets of 1.01% for the year ended December 31, 2010, compared to 1.13% at December 31, 2009 and 0.72% at December 31, 2008. The allowance for loan losses equaled 127.2% of nonperforming and restructured loans at December 31, 2010, versus 91.1% at the end of 2009 and 144.5% at the end of 2008. Net charge-offs to average loans for 2010 decreased to 0.13%, compared to 0.30% for 2009 and 0.21% for 2008. The allowance for loan losses as a percentage of total loans was 1.27% in 2010 compared to 1.33% in 2009 and 1.24% in 2008.

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The earnings of the Company in 2010 were affected primarily by the continued low interest rate environment which resulted in a slightly lower net interest margin partially offset by growth in earning assets and lower provisions for loan losses.

On December 15, 2010, the Company completed the acquisition of OK Bancorporation, Inc., and its subsidiary bank, The Okemah National Bank. At acquisition, The Okemah National Bank had approximately $73 million in total assets, $32 million in loans, $62 million in deposits, and $9 million in equity capital. The bank will operate as The Okemah National Bank until it is merged into BancFirst, which is expected to be during the fourth quarter of 2011. The acquisition did not have a material effect on the Company’s consolidated financial statements.

On December 10, 2010, the Company completed the acquisition of Exchange Bancshares of Moore, Inc., and its subsidiary bank, Exchange National Bank of Moore. At acquisition, Exchange National Bank of Moore had approximately $147 million in total assets, $47 million in loans, $116 million in deposits, and $10 million in equity capital. The bank will operate as Exchange National Bank of Moore until it is merged into BancFirst, which is expected to be during the second quarter of 2011. The acquisition did not have a material effect on the Company’s consolidated financial statements.

On October 8, 2010, the Company completed the acquisition of Union National Bancshares, Inc., and its subsidiary bank, Union Bank of Chandler with offices in Chandler and Tulsa, Oklahoma. At acquisition, Union Bank of Chandler had approximately $134 million in total assets, $90 million in loans, $117 million in deposits, and $15 million in equity capital. Union Bank of Chandler operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst on November 12, 2010. The acquisition did not have a material effect on the Company’s consolidated financial statements.

The Company recorded a total of $13.3 million of goodwill and core deposit intangibles as a result of the three acquisitions above. The combined acquisitions added approximately $371 million in total assets, $169 million in loans and $295 million in deposits. The effects of these acquisitions are included in the consolidated financial statements of the Company from the date of acquisition forward. The Company does not believe these acquisitions, individually or in aggregate are material to the Company’s consolidated financial statements.

Effective as of June 30, 2010, the Company ceased participation in the Transaction Account Guarantee Program (“TAGP”) for extended coverage of noninterest-bearing transaction deposit accounts. Accordingly, the standard insurance amount of $250,000 was in effect for the Company’s deposit accounts through December 31, 2010. In November 2010, the FDIC issued a final rule to implement provisions of the Dodd-Frank Act that provide for temporary unlimited coverage for non-interest-bearing transaction accounts. The separate coverage for non-interest-bearing transaction accounts became effective on December 31, 2010 and terminates on December 31, 2012.

On April 1, 2010, the Company’s insurance agency BancFirst Insurance Services, Inc., formerly known as Wilcox, Jones & McGrath, Inc., completed its acquisition of RBC Agency, Inc., which has offices in Shawnee and Stillwater. BancFirst Insurance Services, Inc. has offices in Oklahoma City, Tulsa, Lawton and Muskogee. The acquisition did not have a material effect on the Company’s consolidated financial statements.

On March 21, 2010, Congress passed student loan reform legislation centralizing student lending in a governmental agency, which as of June 30, 2010 resulted in an end to the student loan programs provided by the Company. As of December 31, 2010, the Company had approximately $56.3 million of student loans remaining in the loan portfolio.

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BancFirst Corporation until it was merged into BancFirst in early March 2010. The acquisition enhanced the presence of BancFirst in eastern Oklahoma County. The acquisition did not have a material effect on the Company’s consolidated financial statements.

In November 2009, the Federal Deposit Insurance Corporation (“FDIC”) issued a rule that required insured depository institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. In December 2009, the Company paid $20.2 million in prepaid risk-based assessments, which included $1.2 million related to the fourth quarter of 2009 that would have otherwise been payable in the first quarter of 2010. This amount is included in deposit insurance expense for 2009. Prepaid deposit insurance of approximately $15.0 million and $19.0 million was included in other assets in the accompanying consolidated balance sheets as of December 31, 2010 and 2009, respectively.

On May 22, 2009 the FDIC increased deposit insurance premiums and imposed a Special Assessment on member financial institutions that was based on June 30, 2009 assets less tier one capital. These increases caused the Company’s noninterest expense to increase in 2009. The amount of $1.9 million was expensed on June 30, 2009.

In November 2008 the Company announced it would not accept funds from the U.S. Treasury’s Capital Purchase Program due to current capital levels that exceeded well-capitalized guidelines and the potential for additional governmental regulation related to the program. The Company also did not elect to participate in the Debt Guarantee Program for newly issued senior unsecured debt. The Company did elect to participate in the Transaction Account Guarantee Program for extended coverage on noninterest-bearing transaction deposit accounts at a cost of 10 basis points per assessable deposits. The Company ceased participation in the TAGP on June 30, 2010.

In April 2008, the Company completed an $80 million sale of securities resulting in a securities pre-tax gain of $6.1 million. The Company also purchased Government Sponsored Enterprises (GSE) senior debt securities of similar amounts and maturities. The after-tax impact of these transactions, net of the interest income differential, was approximately $3.3 million for the year.

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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s significant accounting policies are described in Note (1) to the consolidated financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions, which affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the allowance for loan losses, income taxes, intangible assets and the fair value of financial instruments. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported. The following is a summary of the accounting policies and estimates that management believes are the most critical.

Allowance for Loan Losses

The allowance for loan losses is management’s estimate of the probable losses incurred in the Company’s loan portfolio through the balance sheet date.

The allowance for loan losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs. The amount of the allowance for loan losses is based on past loan loss experience, evaluations of known impaired loans, levels of adversely classified loans, general economic conditions and other

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environmental factors. A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The majority of the Company’s impaired loans are collateral dependent. For collateral dependent loans, the amount of impairment is measured based upon the fair value of the underlying collateral and is included in the allowance for loan losses.

The amount of the allowance for loan losses is first estimated by each business unit’s management based on their evaluation of their unit’s portfolio. This evaluation involves identifying impaired and adversely classified loans. Specific allowances for losses are determined for impaired loans based on either the loans’ estimated discounted cash flows or the fair values of the collateral. Allowances for adversely classified loans are estimated using historical loss percentages for each type of loan adjusted for various economic and environmental factors related to the underlying loans. An allowance is also estimated for non-adversely classified loans using a historical loss percentage based on losses arising specifically from non-adversely classified loans, adjusted for various economic and environmental factors related to the underlying loans. Each month the Company’s Senior Loan Committee reviews each business unit’s allowance, and the aggregate allowance for the Company and, on a quarterly basis, adjusts and approves the adequacy of the allowance. The Senior Loan Committee also periodically evaluates and establishes the loss percentages used in the estimates of the allowance based on historical loss data, and giving consideration to their assessment of current economic and environmental conditions. To facilitate the Senior Loan Committee’s evaluation, the Company’s Asset Quality Department performs periodic reviews of each of the Company’s business units and reports on the adequacy of management’s identification of impaired and adversely classified loans, and their adherence to the Company’s loan policies and procedures.

The process of evaluating the adequacy of the allowance for loan losses necessarily involves the exercise of judgment and consideration of numerous subjective factors and, accordingly, there can be no assurance that the estimate of incurred losses will not change in light of future developments and economic conditions. Different assumptions and conditions could result in a materially different amount for the allowance for loan losses.

Income Taxes

The Company files a consolidated income tax return. Deferred taxes are recognized under the liability method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized.

The amount of accrued current and deferred income taxes is based on estimates of taxes due or receivable from taxing authorities either currently or in the future. Changes in these accruals are reported as tax expense, and involve estimates of the various components included in determining taxable income, tax credits, other taxes and temporary differences. Changes periodically occur in the estimates due to changes in tax rates, tax laws and regulations, and implementation of new tax planning strategies. The process of determining the accruals for income taxes necessarily involves the exercise of considerable judgment and consideration of numerous subjective factors.

Management performs an analysis of the Company’s tax positions annually and believes it is more likely than not that all of its tax positions will be utilized in future years.

Intangible Assets and Goodwill

Core deposit intangibles are amortized on a straight-line basis over the estimated useful lives of seven to ten years and customer relationship intangibles are amortized on a straight-line basis over the estimated useful life of eight to eighteen years. Goodwill is not amortized. At least annually in the fourth quarter, intangible assets are reviewed for reassessment of useful lives and goodwill is evaluated for possible impairment. Impairment losses are measured by comparing the fair values of the intangible assets with their recorded amounts. Any impairment losses are reported in the income statement.

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The evaluation of remaining original core deposit intangibles for possible impairment involves reassessing the useful lives and the recoverability of the intangible assets. The evaluation of the useful lives is performed by reviewing the levels of core deposits of the respective branches acquired. The actual life of a core deposit base may be longer than originally estimated due to more successful retention of customers, or may be shorter due to more rapid runoff. Amortization of core deposit intangibles would be adjusted, if necessary, to amortize the remaining net book values over the remaining lives of the core deposits. The evaluation for recoverability is only performed if events or changes in circumstances indicate that the carrying amount of the intangibles may not be recoverable.

The evaluation of goodwill for possible impairment is performed by comparing the fair values of the related reporting units with their carrying amounts including goodwill. The fair values of the related business units are estimated using market data for prices of recent acquisitions of banks and branches.

The evaluation of intangible assets and goodwill for the years ended December 31, 2010, 2009 and 2008 resulted in no material impairments.

Fair Value of Financial Instruments

Securities that are being held for indefinite periods of time, or that may be sold as part of the Company’s asset/liability management strategy, to provide liquidity or for other reasons, are classified as available for sale and are stated at estimated market value. Unrealized gains or losses on securities available for sale are reported as a component of stockholders’ equity, net of income tax. Securities that are determined to be impaired, and for which such impairment is determined to be other than temporary, are adjusted to fair value and a corresponding loss is recognized.

The estimates of fair values of securities and other financial instruments are based on a variety of factors. In some cases, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future.

Future Application of Accounting Standards

See Note (1) of the Notes to Consolidated Financial Statements for a discussion of recently issued accounting pronouncements and their expected impact on the Company’s financial statements.

Segment Information

See Note (22) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s operating business segments.

RESULTS OF OPERATIONS

Net Interest Income

In 2010, net interest income, which is the Company’s principal source of operating revenue, increased $11.4 million to $142.8 million compared to a decrease of $7.8 million in 2009, and a decrease of $9.2 million in 2008. The net interest margin on a taxable equivalent basis for 2010 was 3.37%, compared to 3.42% for 2009 and 4.05% for 2008. Changes in the volume of earning assets and interest-bearing liabilities, and changes in interest rates determine the changes in net interest income. The following volume/rate analysis summarizes the relative contribution of each of these components to the changes in net interest income in 2010 and 2009. Lower deposit

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rates in 2010 resulted in a positive rate variance partially offset by higher deposit volumes. For 2009, declining loan rates resulted in a significant decrease in net interest income. If interest rates and/or loan volume do not increase, management expects continued compression of its net interest margin in 2011.

VOLUME/RATE ANALYSIS

Taxable Equivalent Basis


	Change in 2010									Change in 2009
	Total			Due to Volume(1)			Due to Rate			Total			Due to Volume(1)			Due to Rate
	(Dollars in thousands)
INCREASE (DECREASE)
Interest Income:
Loans	$	2,072		$	184		$	1,888		$	(19,485	)	$	7,938		$	(27,423	)
Investments—taxable		(1,058	)		3,486			(4,544	)		(2,875	)		(1,496	)		(1,379	)
Investments—tax exempt		(238	)		(151	)		(87	)		(66	)		3			(69	)
Interest-bearing deposits with banks and Federal funds sold		232			924			(692	)		(5,708	)		(2,284	)		(3,424	)

Total interest income		1,008			4,443			(3,435	)		(28,134	)		4,161			(32,295	)

Interest Expense:
Transaction deposits		186			206			(20	)		(1,939	)		(1,643	)		(296	)
Savings deposits		(3,333	)		(2,861	)		(472	)		(3,343	)		3,437			(6,780	)
Time deposits		(7,314	)		4,559			(11,873	)		(14,594	)		6,404			(20,998	)
Short-term borrowings		(5	)		(3	)		(2	)		(447	)		(389	)		(58	)
Long-term borrowings		95			69			26			(9	)		(9	)		—
Junior subordinated debentures		27			35			(8	)		—			5			(5	)

Total interest expense		(10,344	)		2,005			(12,349	)		(20,332	)		7,805			(28,137	)

Net interest income	$	11,352		$	2,438		$	8,914		$	(7,802	)	$	(3,644	)	$	(4,158	)

(1)	Changes in the mix of earning assets and interest-bearing liabilities have been combined with the changes due to volume.

The following interest rate sensitivity analysis measures the sensitivity of the Company’s net interest margin to changes in interest rates by analyzing the repricing relationship between its earning assets and interest-bearing liabilities. This analysis is limited by the fact that it presents a static position as of a single day and is not necessarily indicative of the Company’s position at any other point in time, and does not take into account the sensitivity of rates of specific assets and liabilities to changes in market rates. The Company’s approach to managing the interest sensitivity gap limits risk while taking advantage of the Company’s stable core deposit base and the historical existence of a positively sloped yield curve.

The Analysis of Interest Rate Sensitivity presents the Company’s earning assets and interest-bearing liabilities based on maturity and repricing frequency at December 31, 2010. The Company’s cumulative negative gap position in the one year interval decreased to $621 million at December 31, 2010 from $713 million at December 31, 2009, and decreased as a percentage of total earning assets to 13.2% from 17.4% for the years ended December 31, 2010 and 2009, respectively. This negative gap position assumes that the Company’s core savings and transaction deposits are immediately rate sensitive. In a falling rate or sustained low rate environment, the benefit of the Company’s noninterest-bearing funds is decreased, resulting in a decrease in the Company’s net interest margin over time.

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ANALYSIS OF INTEREST RATE SENSITIVITY

December 31, 2010


	Interest Rate Sensitive						Noninterest Rate Sensitive
	0 to 3 Months			4 to 12 Months			1 to 5 Years			Over 5 Years			Total
	(Dollars in thousands)
EARNING ASSETS
Loans	$	483,679		$	566,148		$	1,179,897		$	582,240		$	2,811,964
Securities		106,935			260,936			190,596			187,876			746,343
Federal funds sold and interest-bearing deposits		1,152,227			—			—			—			1,152,227

Total	$	1,742,841		$	827,084		$	1,370,493		$	770,116		$	4,710,534

FUNDING SOURCES
Noninterest-bearing demand deposits (1)	$	—		$	—		$	—		$	996,236		$	996,236
Savings and transaction deposits		2,280,008			—			—			—			2,280,008
Time deposits of $100 or more		254,118			151,405			3,946			—			409,469
Time deposits under $100		293,821			196,585			5,290			150			495,846
Short-term borrowings		7,250			—			—			—			7,250
Long-term borrowings		—			7,906			26,359			—			34,265
Junior subordinated debentures		—			—			—			28,866			28,866
Stockholders’ equity		—			—			—			458,594			458,594

Total	$	2,835,197		$	355,896		$	35,595		$	1,483,846		$	4,710,534

Interest sensitivity gap	$	(1,092,356	)	$	471,188		$	1,334,898		$	(713,730	)
Cumulative gap	$	(1,092,356	)	$	(621,168	)	$	713,730		$	—
Cumulative gap as a percentage of total earning assets		(23.2	)%		(13.2	)%		15.2	%		—	%

(1)	Represents the amount of demand deposits required to support earning assets in excess of interest-bearing liabilities and stockholders’ equity.

Provision for Loan Losses

The provision for loan losses was $3.0 million for 2010, compared to $10.4 million for 2009 and $10.7 million for 2008. During 2010, credit quality generally stabilized as previously identified problem loans were moved to other real estate owned while potential problem loans decreased. In 2009, credit quality deteriorated with higher levels of potential problem loans and nonperforming loans resulting in an additional provision for loan losses. In 2008, the increase was due to the deterioration of the credit quality of a small number of specific loans resulting from declining collateral values and to a lesser extent, nonperformance. The Company establishes an allowance as an estimate of the probable inherent losses in the loan portfolio at the balance sheet date. Net loan charge-offs were $3.6 million for 2010, compared to $8.3 million for 2009 and $5.5 million for 2008. The net charge-offs equated to 0.13%, 0.30% and 0.21% of average loans for 2010, 2009 and 2008, respectively. A more detailed discussion of the allowance for loan losses is provided under “Loans.”

Noninterest Income

Noninterest income was $69.9 million in 2010 versus $66.9 million in 2009 and $74.4 million in 2008. Total noninterest income increased $3.0 million in 2010, an increase of 4.5%. This compares to a decrease of $7.5 million, or 10.1%, in 2009. Noninterest income was higher in 2010 due to higher service charge revenues and higher insurance commissions partially offset by lower cash management fee revenues. Core noninterest income was up in 2009 due to increases in commercial deposit income and sales of mortgage loans and student loans

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offset by lower cash management revenues. Results for 2008 included one-time items totaling $9.1 million before taxes including pretax gains of approximately $1.8 million from the Company’s interest in the Visa initial public offering, $6.1 million on the sale of securities, and $1.2 million on the sale of an asset. The Company’s fee income has increased in each of the last five years due to improved pricing strategies, enhanced product lines, acquisitions and internal deposit growth.

Service charges on deposits have increased as a result of growth in deposit accounts and overdraft fee revenue combined with the lower earnings credit on deposit balances.

The Company had income from check card usage totaling $12.8 million, $10.8 million and $9.8 million for the years 2010, 2009 and 2008, respectively. The recently enacted Dodd-Frank Act has given the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers. Because of the uncertainty as to any future rulemaking by the Federal Reserve, the Company cannot provide any assurance as to the ultimate impact of the Dodd-Frank Act on the amount of income from check card usage reported in future periods.

The Company recognized a net gain on the sale of securities of $324,000 in 2010, compared to a gain of $336,000 in 2009 and a gain of $6.9 million in 2008. The Company’s practice is to maintain a liquid portfolio of securities and not engage in trading activities. The Company has the ability and intent to hold securities classified as available for sale that were in an unrealized loss position until they mature or until fair value exceeds amortized cost. The net gain on sale of securities in 2008 was primarily due to the sale of U.S. Treasuries and simultaneous purchase of senior GSE debt.

The Company earned $2.9 million on the sale of loans in 2010 compared to $2.8 million in 2009 and $2.1 million in 2008. The activity in the secondary market for mortgage loans increased during 2010 and 2009 due to a large number of refinancings in the historically low interest rate environment. The final sale of student loans occurred in 2010 while activity in student loans was up slightly in 2009 due to less local competition in the market. Student loan activity ceased during 2010 when Congress passed student loan reform legislation centralizing student lending in a governmental agency, which eliminated guaranteed student lending by financial institutions.

Noninterest Expense

Total noninterest expense increased by $5.0 million, or 3.6% to $144.1 million in 2010. This compares to increases of $4.1 million, or 3.0%, for 2009, and $560,000, or 0.4%, for 2008. Noninterest expense rose in 2010 due to higher benefit and acquisition costs partially offset by lower FDIC insurance costs. The increase in noninterest expense in 2009 was primarily due to the FDIC special assessment and higher deposit insurance premium totaling $7.3 million which was partially offset by a $1.8 million reduction in loan origination expense and $900,000 in lower salaries and employee benefits.

During 2009 and 2008, in response to the higher noninterest expense and lower operating margins, the Company implemented a salary freeze for all non-exempt employees along with suspension of branch expansion. These measures were relaxed during 2010.

Income Taxes

Income tax expense totaled $23.3 million in 2010, compared to $16.1 million in 2009 and $23.5 million for 2008. Income tax expense declined in 2009 due to lower pretax income. The effective tax rates for 2010, 2009 and 2008 were 35.5%, 33.0% and 34.6%, respectively. The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits, and state tax expense. The Company had approximately $1.5 million of Federal tax credits that were fully utilized during 2010, which was the final year for these credits.

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Certain financial information is prepared on a taxable equivalent basis to facilitate analysis of yields and changes in components of earnings. Average balance sheets, income statements and other financial statistics are also presented on a taxable equivalent basis.

Impact of Inflation

The impact of inflation on financial institutions differs significantly from that of industrial or commercial companies. The assets of financial institutions are predominantly monetary, as opposed to fixed or nonmonetary assets such as premises, equipment and inventory. As a result, there is little exposure to inflated earnings by understated depreciation charges or significantly understated current values of assets. Although inflation can have an indirect effect by leading to higher interest rates, financial institutions are in a position to monitor the effects on interest costs and yields and respond to inflationary trends through management of interest rate sensitivity. Inflation can also have an impact on noninterest expenses such as salaries and employee benefits, occupancy, services and other costs.

Impact of Deflation

In a period of deflation, it would be reasonable to expect widely decreasing prices for real assets. In such an economic environment, assets of businesses and individuals, such as real estate, commodities or inventory, could decline. The inability of customers to repay or refinance their loans could result in loan losses incurred by the Company far in excess of historical experience due to deflated collateral values.

FINANCIAL POSITION

Cash, Federal Funds Sold and Interest-Bearing Deposits with Banks

Cash consists of cash and cash items on hand, noninterest-bearing deposits and other amounts due from other banks, reserves deposited with the Federal Reserve Bank, and interest-bearing deposits with other banks. Federal funds sold consist of overnight investments of excess funds with other financial institutions. Due to the Federal Reserve Bank’s intervention into the Federal funds market that has resulted in near zero overnight fed funds rates, the Company has continued to maintain the majority of its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period.

The amount of cash, Federal funds sold and interest-bearing deposits with the Federal Reserve Bank carried by the Company is a function of the availability of funds presented to other institutions for clearing, and the Company’s requirements for liquidity, operating cash and reserves, available yields, and interest rate sensitivity management. Balances of these items can fluctuate widely based on these various factors. Cash and Federal funds sold increased $203.8 million in 2010, increased $587.4 million in 2009 and decreased $141.4 million in 2008. The increases in 2010 and 2009 were primarily due to increased deposits.

Securities

For the year ended December 31, 2010, total securities increased $329.2 million to $746.3 million, an increase of 78.9%. This compares to a decrease of $38.4 million, or 8.4%, in 2009 and $12.2 million, or 2.6%, in 2008. For the year ended December 31, 2010, securities increased due to acquisitions and higher pledging requirements for public deposits. Securities available for sale represented 97.1% of the total securities portfolio at December 31, 2010, compared to 92.9% at December 31, 2009 and 92.4% at December 31, 2008. Securities available for sale had a net unrealized gain of $13.0 million at December 31, 2010, compared to a net unrealized gain of $16.9 million at December 31, 2009 and a net unrealized gain of $22.6 million at December 31, 2008. These unrealized gains are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of $8.5 million, $11.0 million and $14.7 million for December 31, 2010, 2009 and 2008 respectively.

A-12

SECURITIES


	December 31
	2010		2009		2008
	(Dollars in thousands)
Held for Investment (at amortized cost)
U.S. Treasury, other Federal agencies and mortgage-backed securities	$	1,207	$	1,446	$	1,855
States and political subdivisions		20,804		28,350		32,613

Total	$	22,011	$	29,796	$	34,468

Estimated market value	$	22,640	$	30,736	$	34,975

Available for Sale (at estimated market value)
U.S. Treasury, other Federal agencies and mortgage-backed securities	$	646,665	$	346,837	$	372,667
States and political subdivisions		64,210		9,625		11,722
Other securities		13,457		30,914		36,711

Total	$	724,332	$	387,376	$	421,100

Total Securities	$	746,343	$	417,172	$	455,568

Declines in the fair value of held for investment and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management has the ability and intent to hold the securities classified as held for investment until they mature, at which time the Company will receive full value for the securities. As of December 31, 2010, the Company had net unrealized gains largely due to decreases in market interest rates from the yields available at the time the underlying securities were purchased. The fair value of those securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date or if market yields for similar investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Furthermore, as of December 31, 2010, management also had the ability and intent to hold all securities classified as available for sale with an unrealized loss for a period of time sufficient for a recovery of cost. Accordingly, as of December 31, 2010, management believes the impairments were temporary and no material impairment loss was realized in the Company’s consolidated income statement. At December 31, 2010, 2009 and 2008, the Company held Class A shares in the Federal Home Loan Bank of Topeka, Kansas. The book value at December 31, 2010, 2009 and 2008 was $2.5 million, $1.0 million and $5.7 million, respectively. The value of the stock was not considered to be impaired.

A-13

MATURITY DISTRIBUTION OF SECURITIES

The following maturity distribution of securities table summarizes the weighted average maturity and weighted average taxable equivalent yields of the securities portfolio at December 31, 2010. The Company manages its securities portfolio for liquidity and as a tool to execute its asset/liability management strategy. Consequently, the average maturity of the portfolio is relatively short. Securities maturing within five years represent 82.4% of the total portfolio.


	Within One Year						After One Year But Within Five Years						After Five Years But Within Ten Years						After Ten Years						Total
	Amount			Yield*			Amount			Yield*			Amount			Yield*			Amount			Yield*			Amount			Yield*
	(Dollars in thousands)
Held for Investment
U.S. Treasury and other federal agencies	$	41			2.72	%	$	661			4.02	%	$	504			6.02	%	$	1			2.40	%	$	1,207			4.83	%
State and political subdivisions		5,720			5.31			12,782			5.27			2,302			6.50			—			—			20,804			5.42

Total	$	5,761			5.29		$	13,443			5.21		$	2,806			6.41		$	1			2.40		$	22,011			5.38

Percentage of total		26.2	%					61.0	%					12.8	%					—	%					100.0	%

Available for Sale
U.S. Treasury and other federal agencies	$	359,795			1.17	%	$	208,869			3.85	%	$	26,003			1.32	%	$	51,998			1.08	%	$	646,665			2.03	%
State and political subdivisions		2,693			3.40			24,715			3.18			24,857			4.22			11,945			6.10			64,210			4.13
Other securities		—			—			79			17.35			—			—			13,378			6.98			13,457			7.05

Total	$	362,488			1.18		$	233,663			3.78		$	50,860			2.74		$	77,321			2.88		$	724,332			2.31

Percentage of total		50.0	%					32.3	%					7.0	%					10.7	%					100.0	%

Total securities	$	368,249			1.25	%	$	247,106			3.87	%	$	53,666			2.94	%	$	77,322			2.88	%	$	746,343			2.41	%

Percentage of total		49.3	%					33.1	%					7.2	%					10.4	%					100.0	%

* Yield on a taxable equivalent basis

Loans

The Company has historically generated loan growth from both internal originations and acquisitions. Total loans increased $73.3 million to $2.8 billion, an increase of 2.7%, in 2010 compared to a decrease of $19.2 million, or 0.7%, in 2009 and an increase of $270.8 million, or 10.9%, in 2008. Loans increased in 2010 due to bank acquisitions offset by the sale of the student loan portfolio. Loans declined slightly in 2009 due to the slowing regional economy.

Composition

The Company’s loan portfolio was diversified among various types of commercial and individual borrowers. Commercial loans were comprised principally of loans to companies in light manufacturing, retail and service industries. Consumer loans were comprised primarily of loans to individuals for automobiles. Student loans have decreased to $56.3 million at December 31, 2010 down from $148.2 million at December 31, 2009 and $131.2 million at December 31, 2008. On March 21, 2010, Congress passed student loan reform legislation centralizing student lending in a governmental agency, which as of June 30, 2010 resulted in an end to the student loan programs provided by the Company. The Company sold all student loans held for sale of $144.5 million in October 2010. The Company did not have any credit card receivables at year end 2010, 2009 or 2008.

A-14

Loans secured by real estate including farmland, multifamily, commercial, one to four family housing and construction and development loans, have been a large portion of the Company’s loan portfolio. The Company is subject to risk of future market fluctuations in property values relating to these loans. The Company attempts to manage this risk through rigorous loan underwriting standards.

LOANS BY CATEGORY


	December 31,
	2010					2009					2008					2007					2006
	Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total
	(Dollars in thousands)
Commercial, financial and other	$	777,576		27.65	%	$	733,386		26.76	%	$	726,602		26.35	%	$	711,124		28.59	%	$	621,675		26.73	%
Real estate—construction		230,367		8.19			201,704		7.37			246,269		8.93			222,820		8.96			223,561		9.61
Real estate—one to four family		608,786		21.65			569,592		20.80			543,183		19.70			513,969		20.67			516,727		22.22
Real estate—farmland, multifamily and commercial		921,958		32.79			881,495		32.19			905,862		32.84			768,451		30.89			705,452		30.34
Consumer		273,277		9.72			352,477		12.88			335,938		12.18			270,735		10.89			258,133		11.10

Total	$	2,811,964		100.00	%	$	2,738,654		100.00	%	$	2,757,854		100.00	%	$	2,487,099		100.00	%	$	2,325,548		100.00	%

MATURITY AND RATE SENSITIVITY OF LOANS

The following table presents the Maturity and Rate Sensitivity of Loans at December 31, 2010, for commercial, financial and other loans, and real estate loans, excluding one to four family residential loans and consumer loans. Approximately 46% of the commercial real estate and other commercial loans have maturities of one year or less. However, many of these loans are renewed at existing or similar terms after scheduled principal reductions. Also, approximately 62% of the commercial real estate and other commercial loans had adjustable interest rates at December 31, 2010.


	Maturing
	Within One Year			After One But Within Five Years			After Five Years			Total
	(Dollars in thousands)
Commercial, financial and other	$	454,263		$	287,956		$	35,357		$	777,576
Real estate—construction		159,574			57,705			13,088			230,367
Real estate—farmland, multifamily and commercial
(excluding loans secured by 1 to 4 family residential properties)		271,002			382,280			268,676			921,958

Total	$	884,839		$	727,941		$	317,121		$	1,929,901

Loans with predetermined interest rates	$	340,481		$	337,556		$	63,020		$	741,057
Loans with adjustable interest rates		544,358			390,385			254,101			1,188,844

Total	$	884,839		$	727,941		$	317,121		$	1,929,901

Percentage of total		45.9	%		37.7	%		16.4	%		100.0	%

During 2009 the Company set rate floors. At December 31, 2010 approximately 74% of the floating rate loan portfolio was at the floor rate. Short-term rates would have to increase approximately 100 basis points before the Company’s loan portfolio would experience a measurable increase in yield.

A-15

The information relating to the maturity and rate sensitivity of loans is based upon contractual maturities and original loan terms. In the ordinary course of business, loans maturing within one year may be renewed, in whole or in part, at interest rates prevailing at the date of renewal.

Nonperforming and Restructured Assets

During 2010, nonperforming and restructured assets increased $1.4 million to $51.3 million, an increase of 2.9%. This compares to an increase of $22.1 million to $49.8 million, or 79.8%, in 2009 and an increase of $12.6 million to $27.7 million, or 83.8%, in 2008. The slight increase in 2010 was due primarily to acquisitions while the increase in 2009 and 2008 resulted from nonperformance on loans of several commercial customers. Nonperforming and restructured loans as a percentage of total loans was 1.00% at December 31, 2010, compared to 1.46% at December 31, 2009 and 0.86% at December 31, 2008.

Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectibility of interest or principal or both is in serious doubt. Interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is reasonably expected. Otherwise, interest income is not recognized until the principal balance is fully collected. Nonaccrual loans decreased $10.4 million to $26.7 million, a decrease of 28.1%, in 2010, compared to an increase of $15.8 million or 73.9% in 2009 and an increase of $9.8 million or 84.6% in 2008. Total interest income which was not accrued on nonaccrual loans outstanding was approximately $1.0 million at December 31, 2010 and $1.4 million at December 31, 2009 and 2008. Only a small amount of this interest is expected to be ultimately collected. Net interest income for 2010 included nonrecurring interest income of $1.3 million.

The classification of a loan as nonperforming does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although in a weakening economy, the Company’s experience has been that the level of collections decline. The above normal risk associated with nonperforming loans has been considered in the determination of the allowance for loan losses. At December 31, 2010, the allowance for loan losses as a percentage of nonperforming and restructured loans was 127.3%, compared to 91.1%, at the end of 2009 and 144.5% at the end of 2008.

At December 31, 2010, other real estate owned and repossessed assets increased to $23.2 million from $9.9 million at December 31, 2009 and $4.0 million at December 31, 2008. The increase during 2010 was due to two commercial loans that were previously on nonaccrual that were transferred to other real estate owned. Other real estate owned consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair market values based upon appraisals, less estimated costs to sell. Writedowns arising at the time of reclassification of such properties from loans to other real estate owned are charged directly to the allowance for loan losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to other real estate owned. Decreases in values of properties subsequent to their classification as other real estate owned are charged to operating expense.

A-16

NONPERFORMING AND RESTRUCTURED ASSETS


	December 31,
	2010			2009			2008			2007			2006
				(Dollars in thousands)
Past due over 90 days and still accruing	$	1,096		$	853		$	1,346		$	823		$	1,884
Nonaccrual		26,701			37,133			21,359			11,568			9,371
Restructured		294			1,970			1,022			1,121			715

Total nonperforming and restructured loans		28,091			39,956			23,727			13,512			11,970
Other real estate owned and repossessed assets		23,179			9,881			3,997			1,568			1,675

Total nonperforming and restructured assets	$	51,270		$	49,837		$	27,724		$	15,080		$	13,645

Nonperforming and restructured loans to total loans		1.00	%		1.46	%		0.86	%		0.54	%		0.51	%

Nonperforming and restructured assets to total assets		1.01	%		1.13	%		0.72	%		0.40	%		0.40	%

Potential problem loans are performing loans to borrowers with a weakened financial condition, or which are experiencing unfavorable trends in their financial condition, which causes management to have concerns as to the ability of such borrowers to comply with the existing repayment terms. BancFirst had approximately $60.3 million, $73.6 million and $66.8 million of these loans at December 31, 2010, 2009 and 2008, respectively, which were not included in nonperforming and restructured assets. In general, these loans are adequately collateralized and have no specific identifiable probable loss. Loans which are considered to have identifiable probable loss potential are placed on nonaccrual status, are allocated a specific allowance for loss or are directly charged-down, and are reported as nonperforming. The Company’s nonaccrual loans are primarily commercial and real estate loans.

Allowance for Loan Losses

The allowance for loan losses reflects management’s estimate of loss incurred in the Company’s loan portfolio through the balance sheet date. The allowance and its adequacy is determined through consideration of many factors, including past loan loss experience, current evaluations of known impaired loans, levels of adversely classified loans, general economic conditions and other environmental factors. The Company’s methodology causes an increase in the reserve upon identification of a potential problem loan. The process of evaluating the adequacy of the allowance for loan losses necessarily involves the exercise of judgment and consideration of numerous subjective factors existing at year end. Accordingly, there can be no assurance that the estimate of incurred losses will not change as economic and environmental factors change from that date. Furthermore, in the future, additional loan loss provisions will be required for future losses as they occur. At December 31, 2010, the Company’s allowance for loan losses represented 1.27% of total loans, compared to 1.33% at December 31, 2009 and 1.24% at December 31, 2008. The overall credit portfolio generally stabilized and net charge-offs declined in 2010. In 2009 and 2008, the Company’s loan portfolio began to experience some isolated credit issues with several customers due primarily to a decline in collateral values and to a lesser extent, nonperformance. If deterioration in the national economy and the credit markets continues, it would be reasonable to expect that the allowance for loan losses would increase in future periods.

Notwithstanding the foregoing, the Company’s recent net charge-off experience continued to remain low compared to the banking industry at both the state and national levels. In 2010, the Company recognized $3.6 million of net charge-offs, which represented 0.13% of average loans, compared to $8.3 million, or 0.30% for 2009 and $5.5 million, or 0.21%, for 2008.

A-17

ANALYSIS OF ALLOWANCE FOR LOAN LOSSES


	Year Ended December 31,
	2010			2009			2008			2007			2006
	(Dollars in thousands)
Balance at beginning of period	$	36,383		$	34,290		$	29,127		$	27,700		$	27,517

Charge-offs:
Commercial		(584	)		(4,940	)		(1,901	)		(455	)		(1,383	)
Real estate		(2,851	)		(2,182	)		(3,326	)		(1,304	)		(778	)
Consumer		(689	)		(1,008	)		(897	)		(888	)		(1,226	)
Other		(56	)		(823	)		(151	)		(36	)		(94	)

Total charge-offs		(4,180	)		(8,953	)		(6,275	)		(2,683	)		(3,481	)

Recoveries:
Commercial		151			172			187			200			277
Real estate		141			137			118			203			686
Consumer		185			252			221			312			342
Other		111			96			236			66			59

Total recoveries		588			657			762			781			1,364

Net charge-offs		(3,592	)		(8,296	)		(5,513	)		(1,902	)		(2,117	)
Provision charged to operations		2,954			10,389			10,676			3,329			1,790
Additions from acquisitions		—			—			—			—			510

Balance at end of period	$	35,745		$	36,383		$	34,290		$	29,127		$	27,700

Average loans	$	2,761,986		$	2,749,544		$	2,612,553		$	2,364,618		$	2,321,459

Total loans	$	2,811,964		$	2,738,654		$	2,757,854		$	2,487,099		$	2,325,548

Net charge-offs to average loans		0.13	%		0.30	%		0.21	%		0.08	%		0.09	%

Allowance to total loans		1.27	%		1.33	%		1.24	%		1.17	%		1.19	%

Allocation of the allowance by category of loans:
Commercial, financial and other	$	10,558		$	9,789		$	9,520		$	8,453		$	7,364
Real estate—construction		3,884			3,447			3,231			3,261			2,939
Real estate—mortgage		18,060			18,533			17,421			14,269			14,121
Consumer		3,243			4,614			4,118			3,144			3,276

Total	$	35,745		$	36,383		$	34,290		$	29,127		$	27,700

Percentage of loans in each category to total loans:
Commercial, financial and other		29.54	%		26.90	%		27.76	%		29.02	%		26.58	%
Real estate—construction		10.86			9.47			9.42			11.20			10.61
Real estate—mortgage		50.52			50.95			50.81			48.99			50.98
Consumer		9.08			12.68			12.01			10.79			11.83

Total		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%

Goodwill and Other Assets

Identifiable intangible assets and goodwill totaled $56.2 million, $41.8 million and $41.8 million at December 31, 2010, 2009 and 2008, respectively. The increase in 2010 was due to the acquisition of an insurance agency and three community banks. The value of these intangible assets and goodwill was not considered to be

A-18

impaired. Other assets at December 31, 2010 include $55.1 million of cash surrender value of life insurance from life insurance companies with satisfactory credit ratings and $15.0 million of prepaid FDIC deposit insurance premium. Other assets at December 31, 2009 include $46.4 million of cash surrender value of life insurance from life insurance companies with satisfactory credit ratings and $19.0 million of prepaid FDIC deposit insurance premium.

Liquidity and Funding

The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions, and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can, to a limited extent, affect its level of deposits. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. In addition to deposits, short-term borrowings comprised primarily of Federal funds purchased and repurchase agreements provide additional funding sources. The Company does not utilize brokered CDs and currently does not rely heavily on long-term borrowings. The Company could also utilize the sale of loans, securities, and liquidation of other assets as sources of liquidity and funding.

Total deposits increased $575 million to $4.5 billion, an increase of 14.6% in 2010, compared to an increase of $551 million or 16.3%, in 2009, and $89 million, or 2.7%, in 2008. The increase in deposits during 2010 was due to acquisitions and internal growth while the increase in 2009 was largely due to approximately $450 million in overnight sweep funds that moved into interest-bearing transaction accounts due to low interest rates on money market funds. Demand deposits as a percentage of total deposits averaged 29.7% in 2010, 28.5% in 2009 and 28.8% in 2008. The Company’s core deposits provide it with a stable, low-cost funding source. Core deposits averaged 90.4%, 89.3% and 89.7% of total deposits in 2010, 2009 and 2008, respectively. Some of the deposits which migrated from overnight sweep funds may move back into money market funds or to other depository institutions if interest rates rise.

ANALYSIS OF AVERAGE DEPOSITS


	Year Ended December 31,
	2010		2009		2008		2007		2006
			(Dollars in thousands)
Average Balances
Demand deposits	$	1,211,712	$	1,054,291	$	955,847	$	877,474	$	874,013
Interest-bearing transaction deposits		612,442		518,914		423,773		398,786		428,620
Savings deposits		1,424,252		1,228,697		1,100,184		1,048,935		884,714
Time deposits under $100		446,799		504,931		492,651		486,089		499,293

Total core deposits		3,695,205		3,306,833		2,972,455		2,811,284		2,686,640
Time deposits of $100 or more		391,790		395,438		342,061		298,316		255,959

Total deposits	$	4,086,995	$	3,702,271	$	3,314,516	$	3,109,600	$	2,942,599

A-19

Percentage of Total Average Deposits and Average Rates Paid


	2010						2009						2008						2007						2006
	% of Total			Rate			% of Total			Rate			% of Total			Rate			% of Total			Rate			% of Total			Rate
Demand deposits		29.65	%					28.47	%					28.84	%					28.22	%					29.70	%
Interest-bearing transaction deposits		14.99			0.23	%		14.02			0.23	%		12.79			0.50	%		12.83			0.75	%		14.57			0.81	%
Savings deposits		34.85			0.86			33.19			1.26			33.19			2.21			33.73			3.81			30.06			3.43
Time deposits under $100		10.93			1.49			13.64			2.26			14.86			3.52			15.63			4.47			16.97			3.85

Total core deposits		90.42						89.32						89.68						90.41						91.30
Time deposits of $100 or more		9.58			1.49			10.68			2.19			10.32			3.67			9.59			4.71			8.70			4.13

Total deposits		100.00	%					100.00	%					100.00	%					100.00	%					100.00	%

Average rate paid on interest-bearing deposits					0.91	%					1.36	%					2.39	%					3.52	%					3.07	%

At December 31, 2010, 76.7% of its time deposits of $100,000 or more mature in one year or less.

MATURITY OF CERTIFICATES OF DEPOSIT


	December 31, 2010
	(In thousands)
$100,000 or More
Three months or less	$	125,755
Over three months through six months		77,855
Over six months through twelve months		110,357
Over twelve months		95,503

Total	$	409,470

Short-term borrowings, consisting primarily of Federal funds purchased and repurchase agreements, are another source of funds for the Company. The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained. Short-term borrowings totaled $7.2 million at December 31, 2010, compared to $100,000 at December 31, 2009 and $12.9 million at December 31, 2008.

The Company has a line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas to use for liquidity or to match-fund certain long-term fixed rate loans. The Company’s assets, including residential first mortgages, are pledged as collateral for the borrowings under the line of credit. The Company had no FHLB borrowings as of December 31, 2009. As of December 31, 2010, the Company had the ability to draw up to $44.3 million on the FHLB line of credit with approximately $19.8 million in advances outstanding due to acquisitions. On October 8, 2010, the Company completed the acquisition of Union National Bancshares, Inc., and its subsidiary bank, Union Bank of Chandler, which had $765,000 in FHLB advances outstanding as of that date. On December 10, 2010, the Company completed the acquisition of Exchange Bancshares of Moore, Inc., and its subsidiary bank, Exchange National Bank of Moore, which had $19 million in FHLB advances outstanding as of this date. The advances mature at varying dates through 2014 and had rates between 1.7% and 4.3% at December 31, 2010.

A-20

September and December until the maturity date of November 30, 2013, at which time the entire unpaid balance including all accrued and unpaid interest would be due and payable. A scheduled principal reduction payment will be made on or before November 30, 2011 and November 30, 2012 equal to 25% of the unpaid principal amount outstanding. The loan may be prepaid in whole or in part without fee or penalty at any time. The proceeds were used to fund a portion of the Company’s recent acquisitions.

Historically, the Bank is more liquid than its peers. This liquidity positions the Bank to respond to increased loan demand and other requirements for funds, or to decreases in funding sources. The liquidity of BancFirst Corporation, however, is dependent upon dividend payments from the Bank and its ability to obtain financing. Banking regulations limit bank dividends based upon net earnings retained by the bank and minimum capital requirements. Dividends in excess of these limits require regulatory approval. At January 1, 2011, the Bank had approximately $43.1 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2010, the Bank declared four common stock dividends totaling $14.8 million and two preferred stock dividends totaling $1.9 million.

Capital Resources

Stockholders’ equity totaled $459 million at December 31, 2010, compared to $431 million at December 31, 2009 and $414 million at December 31, 2008. Stockholders’ equity has continued to increase due to net earnings retained, stock option exercises, and unrealized gains on securities, partially offset by common stock repurchases, dividends and unrealized losses on securities. The Company’s average equity capital ratio for 2010 was 9.74%, compared to 10.15% for 2009 and 10.35% for 2008. At December 31, 2010, the Company’s leverage ratio was 8.39%, its Tier 1 capital ratio was 13.53%, and its total risk-based capital ratio was 14.68%; compared to minimum requirements of 3%, 4% and 8%, respectively. Banking institutions are generally expected to maintain capital well above the minimum levels.

See Note (15) of the Notes to Consolidated Financial Statements for a discussion of capital ratio requirements.

In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”) authorizing management to repurchase shares of the Company’s common stock. 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 must be approved by the Company’s Executive Committee. At December 31, 2010 there were 543,900 shares remaining that could be repurchased under the SRP. For the year ended December 31, 2010 the Company repurchased 16,500 shares of its common stock for $605,400 or an average price of $36.69 per share under the SRP and for the year ended December 31, 2008, the Company repurchased 40,000 shares of its common stock for $1.63 million or an average price of $40.70 per share under the SRP. No shares were repurchased in 2009.

A-21

Trust Preferred Securities represent an undivided interest in the $26.8 million of 7.20% Junior Subordinated Debentures and are guaranteed by BancFirst Corporation. During any deferral period or during any event of default, BancFirst Corporation may not declare or pay any dividends on any of its capital stock. In March 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the Tier 1 capital of bank holding companies. The Cumulative Trust Preferred Securities were callable at par, in whole or in part, after March 31, 2009.

In October 2010, BancFirst Corporation acquired Union National Statutory Trust I (“UNST I”), a trust formed under the Delaware Business Trust Act, from the merger of Union National Bancshares, Inc. BancFirst Corporation owns all of the common securities of UNST I. The trust had issued $2 million of aggregate liquidation amount of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Deferrable Interest Debentures”) to other investors. The proceeds from the sale of the Deferrable Interest Debentures and the common securities of UNST I were invested in $2.1 million of Junior Subordinated Debentures of Union National Bancshares, Inc., which were assumed by BancFirst Corporation as a result of the merger. Interest payments on the $2.1 million of Junior Subordinated Debentures are payable March 15, June 15, September 15 and December 15 of each year. The interest rate on the $2.1 million of Junior Subordinated Debentures was set at 6.5% through March 2011 at which time the rate would switch to three-month LIBOR plus 165 basis points. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the $2.1 million of Junior Subordinated Debentures is March 15, 2036, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Deferrable Interest Debentures represent an undivided interest in the $2.1 million of Junior Subordinated Debentures and are guaranteed by BancFirst Corporation. During any deferral period or during any event of default, BancFirst Corporation may not declare or pay any dividends on any of its capital stock. In March 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the Tier 1 capital of bank holding companies. The Deferrable Interest Debentures were callable at par, in whole or in part, after March 15, 2011.

Future dividend payments will be determined by the Company’s Board of Directors in light of the earnings and financial condition of the Company and the Bank, their capital needs, applicable governmental policies and regulations and such other factors as the Board of Directors deems appropriate. While no assurance can be given as to the Company’s ability to pay dividends, management believes that, based upon the anticipated performance of the Company, regular dividend payments will continue in 2011.

Related Party Transactions

See Note (18) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s related party transactions.

CONTRACTUAL OBLIGATIONS

The Company has various contractual obligations that require future cash payments. The following table presents certain known payments for contractual obligations, by payment due period, as of December 31, 2010.


	Payment Due By Period
	Less Than 1 Year		1 to 3 Years		3 to 5 Years		Over 5 Years		Indeterminate Maturity		Totals
					(Dollars in Thousands)
Junior subordinated debentures (1)	$	2,025	$	3,942	$	3,942	$	64,287	$	—	$	74,196
Operating lease payments		749		794		200		626		—		2,369
Long-term borrowings		7,906		22,359		4,000		—		—		34,265
Certificates of deposit		703,099		158,585		43,314		317		—		905,315

Total contractual cash obligations	$	713,779	$	185,680	$	51,456	$	65,230	$	—	$	1,016,145

(1)	Includes principal and interest.

A-22

MARKET RISK

Market risk refers to the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates, commodity prices, and other relevant market rates and prices, such as equity prices. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows, and future earnings. Due to the nature of its operations, the Company is primarily exposed to interest rate risk arising principally from its lending, investing, deposit and borrowing activities and, to a lesser extent, liquidity risk.

Interest rate risk on the Company’s balance sheets consists of repricing, option, and basis risks. Repricing risk results from the differences in the maturity, or repricing, of asset and liability portfolios. Option risk arises from “embedded options” present in many financial instruments such as loan prepayment options, deposit early withdrawal options and interest rate options. These options allow customers opportunities to benefit when market interest rates change, which typically results in higher costs or lower revenue for the Company. Basis risk refers to the potential for changes in the underlying relationship between market rates and indices, which subsequently result in a narrowing of the profit spread on an earning asset or liability. Basis risk is also present in administered rate liabilities, such as savings accounts, negotiable order of withdrawal accounts, and money market accounts where historical pricing relationships to market rates may change due to the level or directional change in market interest rates.

The Company seeks to reduce fluctuations in its net interest margin and to optimize net interest income with acceptable levels of risk through periods of changing interest rates. Accordingly, the Company’s interest rate sensitivity and liquidity are monitored on an ongoing basis by its Asset and Liability Committee (“ALCO”). ALCO establishes risk measures, limits and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. A variety of measures are used to provide for a comprehensive view of the magnitude of interest rate risk, the distribution of risk, the level of risk over time and the exposure to changes in certain interest rate relationships.

The Company utilizes an earnings simulation model as a quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income over the next 12 months. These simulations incorporate assumptions regarding pricing and the repricing and maturity characteristics of the existing balance sheet.

The ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.

As of December 31, 2010, the model simulations projected that a 100 and 200 basis point increase would result in positive variances in net interest income of 3.81% and 8.88%, respectively, relative to the base case, over the next 12 months. Conversely, the model simulation projected that a decrease in interest rates of 25 basis points would result in a negative variance in net interest income of 2.24% relative to the base case, over the next 12 months. The likelihood of a decrease in interest rates beyond 25 basis points as of December 31, 2010 was considered to be remote given prevailing interest rate levels.

A-23

The following table presents the Company’s financial instruments that are sensitive to changes in interest rates, their expected maturities and their estimated fair values at December 31, 2010.


	Avg Rate			Expected Maturity / Principal Repayments at December 31,												Balance		Fair Value
	Avg Rate			2011		2012		2013		2014		2015		Thereafter		Balance		Fair Value
	(Dollars in thousands)
Interest Sensitive Assets
Loans		5.62	%	$	1,728,918	$	455,527	$	390,747	$	88,791	$	82,489	$	65,492	$	2,811,964	$	2,791,741
Securities		2.35			368,249		119,324		36,999		27,945		62,838		130,988		746,343		746,972
Federal funds sold and interest- bearing deposits		0.25			1,152,227		—		—		—		—		—		1,152,227		1,149,766
Interest Sensitive Liabilities
Savings and transaction deposits		0.67			3,598,439		—		—		—		—		—		3,598,439		3,604,060
Time deposits		1.49			703,099		123,830		34,755		24,184		19,130		317		905,315		910,122
Short-term borrowings		0.14			7,250		—		—		—		—		—		7,250		7,250
Long-term borrowings		3.90			7,906		9,013		13,346		4,000		—		—		34,265		33,520
Junior subordinated debentures		7.44			—		—		—		—		—		28,866		28,866		31,010
Off Balance Sheet Items
Loan commitments					—		—		—		—		—		—		—		1,095
Letters of credit					—		—		—		—		—		—		—		415

The expected maturities and principal repayments are based upon the contractual terms of the instruments. Prepayments have been estimated for certain instruments with predictable prepayment rates. Savings and transaction deposits are assumed to mature all in the first year as they are not subject to withdrawal restrictions and any assumptions regarding decay rates would be very subjective. The actual maturities and principal repayments for the financial instruments could vary substantially from the contractual terms and assumptions used in the analysis.

A-24

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management has assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria established in “Internal Control—Integrated Framework,” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on that assessment and criteria, management has determined that the Company has maintained effective internal control over financial reporting as of December 31, 2010.

Grant Thornton LLP, independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 and has issued an unqualified report thereon.

BancFirst Corporation

Oklahoma City, Oklahoma

March 15, 2011

/S/ DAVID E. RAINBOLT

David E. Rainbolt

President and Chief Executive Officer

(Principal Executive Officer)

/S/ JOE T. SHOCKLEY, JR.

Joe T. Shockley, Jr.

Executive Vice President and

Chief Financial Officer

(Principal Financial Officer)

/S/ RANDY FORAKER

Randy Foraker

Executive Vice President and

Chief Risk Officer

(Principal Accounting Officer)

A-25

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

BancFirst Corporation

We have audited BancFirst Corporation (an Oklahoma corporation) and Subsidiaries’ (collectively, the Company) internal control over financial reporting of as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of BancFirst Corporation and Subsidiaries, as of December 31, 2010 and 2009, and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flow for each of the three years in the period ended December 31, 2010 and our report dated March 15, 2011 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Oklahoma City, Oklahoma

March 15, 2011

A-26

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

BancFirst Corporation

We have audited the accompanying consolidated balance sheets of BancFirst Corporation (an Oklahoma corporation) and Subsidiaries (collectively, the Company) as of December 31, 2010 and 2009, and the related consolidated statements of income and comprehensive income, stockholders’ equity and cash flow for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of BancFirst Corporation and Subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 15, 2011 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Oklahoma City, Oklahoma

March 15, 2011

A-27

BANCFIRST CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	December 31,
	2010			2009
ASSETS
Cash and due from banks	$	93,059		$	106,856
Interest-bearing deposits with banks		1,111,020			929,654
Federal funds sold		41,207			5,000
Securities (market value: $746,972 and $418,112, respectively)		746,343			417,172
Loans:
Total loans (net of unearned interest)		2,811,964			2,738,654
Allowance for loan losses		(35,745	)		(36,383	)

Loans, net		2,776,219			2,702,271
Premises and equipment, net		97,796			91,794
Other real estate owned, net		22,956			9,505
Intangible assets, net		11,610			7,144
Goodwill		44,548			34,684
Accrued interest receivable		21,914			21,670
Other assets		93,577			90,365

Total assets	$	5,060,249		$	4,416,115

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	1,318,431		$	1,157,688
Interest-bearing		3,185,323			2,771,328

Total deposits		4,503,754			3,929,016
Short-term borrowings		7,250			100
Accrued interest payable		3,235			3,886
Long-term borrowings		34,265			—
Other liabilities		24,285			25,559
Junior subordinated debentures		28,866			26,804

Total liabilities		4,601,655			3,985,365

Commitments and contingent liabilities (Note (19))
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: 15,368,717 and 15,308,741, respectively		15,369			15,309
Capital surplus		73,040			69,725
Retained earnings		361,680			334,693
Accumulated other comprehensive income, net of income tax of $4,551 and $5,915, respectively		8,505			11,023

Total stockholders’ equity		458,594			430,750

Total liabilities and stockholders’ equity	$	5,060,249		$	4,416,115

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

A-28

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Dollars in thousands, except per share data)


	Year Ended December 31,
	2010			2009			2008
INTEREST INCOME
Loans, including fees	$	154,822		$	152,731		$	172,234
Securities:
Taxable		12,378			13,436			16,387
Tax-exempt		1,243			1,398			1,439
Federal funds sold		12			1			7,315
Interest-bearing deposits with banks		2,462			2,240			549

Total interest income		170,917			169,806			197,924

INTEREST EXPENSE
Deposits		26,081			36,508			56,384
Short-term borrowings		6			11			458
Long-term borrowings		61			—			9
Junior subordinated debentures		1,993			1,966			1,966

Total interest expense		28,141			38,485			58,817

Net interest income		142,776			131,321			139,107
Provision for loan losses		2,954			10,389			10,676

Net interest income after provision for loan losses		139,822			120,932			128,431

NONINTEREST INCOME
Trust revenue		6,288			5,826			5,972
Service charges on deposits		39,343			37,096			33,060
Securities transactions		324			336			6,938
Income from sales of loans		2,942			2,779			2,127
Insurance commissions		8,543			6,979			6,913
Cash management		6,536			8,476			10,796
Gain on sale of other assets		379			213			2,971
Other		5,564			5,159			5,608

Total noninterest income		69,919			66,864			74,385

NONINTEREST EXPENSE
Salaries and employee benefits		82,359			79,019			79,886
Occupancy and fixed assets expense, net		9,050			8,346			8,956
Depreciation		7,424			7,520			7,647
Amortization of intangible assets		1,107			920			902
Data processing services		4,352			3,636			3,297
Net expense from other real estate owned		948			366			179
Marketing and business promotion		5,887			5,529			6,271
Deposit insurance		5,722			7,833			489
Other		27,246			25,948			27,379

Total noninterest expense		144,095			139,117			135,006

Income before taxes		65,646			48,679			67,810
Income tax expense		23,337			16,070			23,452

Net income		42,309			32,609			44,358
Other comprehensive (loss) income, net of tax of $(1,417), $(1,988) and $4,161, respectively Unrealized (losses) gains on securities		(2,729	)		(3,872	)		3,218
Reclassification adjustment for gains included in net income		211			218			4,510

Comprehensive income	$	39,791		$	28,955		$	52,086

NET INCOME PER COMMON SHARE
Basic	$	2.76		$	2.13		$	2.91

Diluted	$	2.70		$	2.09		$	2.85

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

A-29

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in thousands, except share data)


	Year Ended December 31,
	2010						2009					2008
	Shares			Amount			Shares		Amount			Shares			Amount
COMMON STOCK
Issued at beginning of period		15,308,741		$	15,309			15,281,141	$	15,281			15,217,230		$	15,217
Shares issued		76,476			76			27,600		28			103,911			104
Shares acquired and canceled		(16,500	)		(16	)		—		—			(40,000	)		(40	)

Issued at end of period		15,368,717		$	15,369			15,308,741	$	15,309			15,281,141		$	15,281

CAPITAL SURPLUS
Balance at beginning of period				$	69,725				$	67,975					$	63,917
Common stock issued					1,581					460						1,763
Tax effect of stock options					516					252						1,103
Stock option expense					1,218					1,038						1,192

Balance at end of period				$	73,040				$	69,725					$	67,975

RETAINED EARNINGS
Balance at beginning of period				$	334,693				$	315,858					$	285,879
Net income					42,309					32,609						44,358
Dividends on common stock ($0.96, $0.90 and $0.84 per share, respectively)					(14,733	)				(13,774	)					(12,785	)
Common stock acquired and canceled					(589	)				—						(1,594	)

Balance at end of period				$	361,680				$	334,693					$	315,858

ACCUMULATED OTHER COMPREHENSIVE INCOME
Unrealized gains (losses) on securities:
Balance at beginning of period				$	11,023				$	14,677					$	6,949
Net change					(2,518	)				(3,654	)					7,728

Balance at end of period				$	8,505				$	11,023					$	14,677

Total stockholders’ equity				$	458,594				$	430,750					$	413,791

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

A-30

BANCFIRST CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(Dollars in thousands)


	December 31,
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	42,309		$	32,609		$	44,358
Adjustments to reconcile to net cash provided by operating activities:
Provision for loan losses		2,954			10,389			10,676
Depreciation and amortization		8,531			8,440			8,549
Net amortization of securities premiums and discounts		2,723			2,556			1,888
Realized securities gains		(324	)		(336	)		(6,938	)
Gain on sales of loans		(2,942	)		(2,779	)		(2,127	)
Cash receipts from the sale of loans originated for sale		313,902			287,795			122,910
Cash disbursements for loans originated for sale		(239,439	)		(321,856	)		(118,460	)
Deferred income tax provision		(58	)		467			(825	)
Gains on other assets		(341	)		(57	)		(3,020	)
Decrease in interest receivable		1,666			2,728			1,695
Decrease in interest payable		(1,152	)		(1,941	)		(2,004	)
Amortization of stock based compensation arrangements		1,218			1,038			1,192
Prepayment of deposit insurance		—			(19,075	)		—
Other, net		1,843			728			2,610

Net cash provided by operating activities		130,890			706			60,504

INVESTING ACTIVITIES
Net cash and due from banks used for acquisitions		(37,226	)		(5,452	)		(311	)
Purchases of securities:
Held for investment		(345	)		(2,423	)		(14,035	)
Available for sale		(296,959	)		(91,292	)		(233,774	)
Maturities of securities:
Held for investment		7,978			7,067			4,786
Available for sale		67,927			109,822			182,611
Proceeds from sales and calls of securities:
Held for investment		155			24			47
Available for sale		5,783			7,413			89,455
Net decrease (increase) in Federal funds sold		1,749			(4,000	)		398,000
Purchases of loans		(3,935	)		(27,278	)		(60,328	)
Proceeds from sales of loans		27,818			14,895			43,447
Net other (decrease) increase in loans		(22,726	)		46,689			(267,213	)
Purchases of premises, equipment and computer software		(7,508	)		(6,013	)		(13,368	)
Proceeds from the sale of other assets		6,458			7,661			7,258

Net cash (used in) provided by investing activities		(250,831	)		57,113			136,575

FINANCING ACTIVITIES
Net increase in demand, transaction and savings deposits		323,196			523,533			56,072
Net (decrease) increase in certificates of deposits		(43,237	)		27,875			33,032
Net increase (decrease) in short-term borrowings		7,250			(12,784	)		(17,517	)
Issuance and assumption (paydown) of long-term borrowings		13,466			—			(606	)
Issuance of common stock		2,173			740			2,970
Acquisition of common stock		(605	)		—			(1,634	)
Cash dividends paid		(14,733	)		(13,774	)		(12,785	)

Net cash provided by financing activities		287,510			525,590			59,532

Net increase in cash, due from banks and interest-bearing deposits		167,569			583,409			256,611
Cash, due from banks and interest-bearing deposits at the beginning of the period		1,036,510			453,101			196,490

Cash, due from banks and interest-bearing deposits at the end of the period	$	1,204,079		$	1,036,510		$	453,101

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest	$	28,792		$	40,426		$	60,822

Cash paid during the year for income taxes	$	23,389		$	12,400		$	24,357

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

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BANCFIRST CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to generally accepted accounting principles and general practice within the banking industry. A summary of the significant accounting policies follows.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services Inc., Exchange National Bank of Moore, The Okemah National Bank and BancFirst and its subsidiaries (the “Bank”). The operating subsidiaries of BancFirst are Council Oak Investment Corporation, Council Oak Real Estate Inc., BancFirst Agency, Inc., Lenders Collection Corporation and BancFirst Community Development Corporation. 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.

Use of Estimates

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, the fair value of financial instruments and the valuation of intangibles. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

Securities

The Company does not engage in securities trading activities. Any sales of securities are for the purpose of executing the Company’s asset/liability management strategy, eliminating a perceived credit risk in a specific security, or providing liquidity. Securities that are being held for indefinite periods of time, or that may be sold as part of the Company’s asset/liability management strategy, to provide liquidity or for other reasons, are classified as available for sale and are stated at estimated market value. Securities with limited marketability, such as Federal Home Loan Bank stock, are carried at cost and are classified as available for sale. Unrealized gains or losses on securities available for sale are reported as a component of stockholders’ equity, net of income tax. Gains or losses from sales of securities are based upon the book values of the specific securities sold. Securities for which the Company has the intent and ability to hold to maturity are classified as held for investment and are stated at cost, adjusted for amortization of premiums and accretion of discounts computed under the interest method. The Company reviews its portfolio of securities for impairment at least quarterly. Impairment is considered to be other-than-temporary if it is likely that all amounts contractually due will not be received for debt securities and when there is no positive evidence indicating that an investment’s carrying amount is recoverable in the near term for equity securities. When impairment is considered other-than-temporary, the cost basis of the security is written down to fair value, with the impairment charge included in earnings. In evaluating whether the impairment is temporary or other-than-temporary, the Company considers, among other things, the time period the security has been in an unrealized loss position, and whether the Company has the intent and ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value.

Loans

Loans originated within the bank are stated at the principal amount outstanding, net of unearned interest, loan fees, and allowance for loan losses. Interest income on certain installment loans is recorded by use of a

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method that produces a reasonable approximation of a constant yield on the outstanding principal. Interest on all other performing loans is recognized, on a simple interest basis, based upon the principal amount outstanding. A loan is placed on nonaccrual status when, in the opinion of management, the future collectibility of interest and/or principal is not probable. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is reasonably expected. Otherwise, interest income is not recognized until the principal balance is fully collected. Loans acquired in business combinations since December 2009 are reported at fair value as of the acquisition date. Fair value is estimated considering adjustments for credit quality and contractual interest rates. Any difference between the fair value and principal amount outstanding is amortized into income or expense over the remaining life of the loan. See Note (5) for loan disclosures.

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 the 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 30 days of origination. Loans held for sale are carried at the lower of cost or market. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis.

Allowance for Loan Losses

The allowance for loan losses is an estimate of probable credit losses related to specifically identified loans and for losses inherent in the portfolio that have been incurred as of the balance sheet date. The allowance for loan losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs. The amount of the allowance for loan losses is based on past loan loss experience, evaluations of known impaired loans, levels of adversely graded loans, general economic conditions and other environmental factors. Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in aggregate for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific allowance is provided, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected primarily from the collateral. Interest payments on impaired loans are typically applied to principal unless collectibility of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

Premises and Equipment

Premises and equipment are stated at cost, less accumulated depreciation. Depreciation is charged to operating expense and is computed using the straight-line method over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred while improvements are capitalized. Premises and equipment is tested for impairment if events or changes in circumstances occur that indicate that the carrying amount of any premises and equipment may not be recoverable. Impairment losses are measured by comparing the fair values of the premises and equipment with their recorded amounts. Premises that are identified to be sold are transferred to other real estate owned at the lower of their carrying amounts or their fair market values less estimated costs to sell. Any losses on premises identified to be sold are charged to operating expense. When premises and equipment are transferred to other real estate owned, sold, or otherwise retired, the cost and applicable accumulated depreciation are removed from the respective accounts and any resulting gains or losses are reported in the income statement.

Other Real Estate Owned

Other real estate owned consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure, and premises held for sale. These properties are carried at the lower of the book

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values of the related loans or fair market values based upon appraisals, less estimated costs to sell. Losses arising at the time of reclassification of such properties from loans to other real estate owned are charged directly to the allowance for loan losses. Any losses on premises identified to be sold are charged to operating expense at the time of transfer from premises to other real estate owned. Losses from declines in value of the properties subsequent to classification as other real estate owned are charged to operating expense.

Intangible Assets and Goodwill

Core deposit intangibles are amortized on a straight-line basis over the estimated useful lives of seven to ten years. Goodwill is not amortized, but is evaluated at least annually for impairment. Customer relationship intangibles are amortized on a straight-line basis over the estimated useful lives of eight to eighteen years. All intangible assets are reviewed annually in the fourth quarter for reassessment of useful lives. Impairment losses are measured by comparing the fair values of the intangible assets with their recorded amounts. Any impairment losses are reported in the income statement.

Derivatives

The Company recognizes all of its derivative instruments as assets or liabilities in the balance sheet at fair value and recognizes the realized and unrealized change in fair value in the income statement.

Share-Based Compensation

The Company recognizes share-based compensation as compensation cost in the income statement based on the fair value of the Company’s stock options on the measurement date, which, for the Company, is the date of the grant. 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.

Income Taxes

The Company files a consolidated income tax return with its subsidiaries. Federal and state income tax expense or benefit has been allocated to subsidiaries on a separate return basis. Deferred taxes are recognized under the liability method based upon the future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities, using the tax rates expected to apply to taxable income in the periods when the related temporary differences are expected to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income, less any preferred dividends requirement, by the weighted average of common shares outstanding. Diluted earnings per common share reflects the potential dilution that could occur if options, convertible securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

Comprehensive Income

Comprehensive income includes all changes in stockholders’ equity during a period, except those resulting from transactions with shareholders. Besides net income, other components of the Company’s comprehensive income includes the after tax effect of changes in the net unrealized gain/loss on securities available for sale.

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Statement of Cash Flows

For purposes of the statement of cash flows, the Company considers cash and due from banks, and interest-bearing deposits with banks as cash equivalents.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) was effective for the Company’s financial statements for periods ending after September 15, 2009. On July 1, 2009, the ASC became the single source of authoritative non-governmental U.S. generally accepted accounting principles (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative guidance for SEC registrants. All guidance contained in the Codification carries an equal level of authority. All non-grandfathered, non-SEC accounting literature not included in the Codification is superseded and deemed non-authoritative. Implementation of the ASC did not have a significant impact on the Company’s financial statements.

In January 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-01 which temporarily defers the effective date in ASU 2010-20 for disclosure about troubled debt restructuring by creditors to coincide with the effective date of the proposed guidance clarifying what constitutes a troubled debt restructuring. The adoption of this disclosure-only guidance is not expected to have an effect on the Company’s financial statements.

In December 2010, the FASB issued ASU 2010-29 “Business Combinations (Topic 805)—Disclosures of Supplementary Pro Forma Information for Business Combinations.” The amendments in this update affect any public entity as defined in Topic 805 that enters into business combinations that are material on an individual or aggregate basis. The amendments in the update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this update are effective prospectively for business combinations for which the acquisition date is on or after December 15, 2010. The Company did not have any material business combination(s) for the periods presented. The adoption of this update did not have an effect on the Company’s financial statements.

In December 2010, the FASB issued ASU 2010-28 “Intangibles – Goodwill and Other (Topic 350)—When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The amendments in this update affect all entities that have recognized goodwill and have one or more reporting units whose carrying amount for purposes of performing Step 1 of the goodwill impairment test is zero or negative. For public entities, the amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company does not have any reporting units with zero or negative carrying amounts, therefore the adoption of this update did not have an effect on the Company’s financial statements.

In July 2010, the FASB issued ASU 2010-20 “Receivables (Topic 310)—Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which expands the disclosure requirements concerning the credit quality of an entity’s financing receivables and its allowance for loan losses. The new disclosures that relate to information as of the end of the reporting period is effective as of December 31, 2010, whereas the disclosures related to activity that occurred during the reporting periods is effective January 1, 2011. The adoption of this disclosure-only guidance did not have an effect on the Company’s financial statements. See Note (5) for disclosure.

In January 2010 the FASB issued ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 amends Codification Subtopic 820-10 to

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now require entities to make new disclosures about the different classes of assets and liabilities measured at fair value. The new requirements are as follows: (1) a reporting entity should disclose separately the amounts of significant transfers between Level 1 and Level 2 fair value measurements and the reasons for the transfers, and (2) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information on purchases, sales, issuances and settlements on a gross basis. The FASB also clarified existing fair value measurement disclosure guidance about the level of disaggregation of assets and liabilities, and information about the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. Except for certain detailed Level 3 disclosures, which are effective for fiscal years beginning after December 15, 2010 and interim periods within those fiscal years, the new guidance is effective for the Company’s financial statements for the periods ending after December 15, 2009. The adoption of this disclosure-only guidance did not have an effect on the Company’s financial statements. See Note (20) for disclosure.

In April 2009, the FASB issued ASC Topic 320 “Investments – Debt and Equity Securities Recognition and Presentation of Other-Than-Temporary Impairments” amends the other-than-temporary impairment guidance under GAAP for debt securities to make the guidance more operational and improve the presentation and disclosure in the financial statements. The ASU specifies that if a company does not have the intent to sell a debt security prior to recovery and it is more likely than not that it will not have to sell the debt security prior to recovery; the security would not be considered other-than-temporarily impaired unless there is a credit loss. The credit loss component of other-than-temporarily impaired debt security must be determined based on the company’s best estimate of cash flows expected to be collected. This guidance became effective for the interim and annual periods ending after June 15, 2009. Implementation of this pronouncement did not have a significant impact on the Company’s financial statements. See Note (4) for disclosure.

In March 2008, the FASB issued FASB ASC Topic 815 “Derivatives and Hedging.” This new accounting guidance expanded the disclosure requirements for derivative and hedging activities 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, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. The guidance 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. The guidance became effective for the Company on January 1, 2009. Implementation of this pronouncement did not have a significant impact on the Company’s financial statements. See Note (21) for disclosure.

Effective January 1, 2008, the Company adopted the provisions of FASB ASC Topic 820 “Fair Value Measurements and Disclosures” for financial assets and financial liabilities. The Company adopted the provisions of FASB ASC Topic 820 for non-financial assets and non-financial liabilities on January 1, 2009. FASB ASC Topic 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. In April 2009 additional new accounting guidance under ASC Topic 820 expanded certain disclosure requirements. Determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly, provides additional guidance for estimating fair value in accordance with ASC Topic 820, when the volume and level of activity for the asset and liability have significantly decreased and for identifying circumstances that indicate a transaction is not orderly. ASC Topic 820 does not prescribe a methodology for making significant adjustments to transactions or quoted prices when estimating fair value in these situations but states that a change in valuation technique or the use of multiple valuation techniques may be appropriate. Interim disclosures about fair value of financial instruments requires companies to provide the same fair value of financial instruments disclosures presently required on an annual basis on a quarterly interim basis. This guidance became effective for the interim and annual periods ending after June 15, 2009. Implementation of this ASC Topic did not have a significant impact on the Company’s financial statements. See Note (20) for disclosure.

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Effective January 1, 2009, the Company adopted the provisions of FASB ASC Topic 805 “Business Combinations,” 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. The provision applies prospectively to business combinations for which the acquisition date is on or after fiscal years beginning after December 15, 2008. Implementation of this pronouncement did not have a material effect on the Company’s financial statements.

(2) RECENT TRANSACTIONS, INCLUDING MERGERS & ACQUISITIONS

The Company recorded a total of $13.3 million of goodwill and core deposit intangibles as a result of the three acquisitions above. The combined acquisitions added approximately $371 million in total assets, $169 million in loans and $295 million in deposits. The effects of these acquisitions were included in the consolidated financial statements of the Company from the date of acquisition forward. The Company does not believe these acquisitions, individually or in aggregate were material to the Company’s consolidated financial statements.

Effective as of June 30, 2010, the Company ceased participation in the Transaction Account Guarantee Program (“TAGP”) for extended coverage of noninterest-bearing transaction deposit accounts. Accordingly, the standard insurance amount was in effect for the Company’s deposit accounts through December 31, 2010. In November 2010, the FDIC issued a final rule to implement provisions of the Dodd-Frank Act that provide for temporary unlimited coverage for non-interest-bearing transaction accounts. The separate coverage for non-interest-bearing transaction accounts became effective on December 31, 2010 and terminates on December 31, 2012.

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On March 21, 2010, Congress passed student loan reform legislation centralizing student lending in a governmental agency, which as of June 30, 2010 resulted in an end to the student loan programs provided by the Company. As of December 31, 2010, the Company had no student loans held for sale and had approximately $56.3 million of student loans held for investment.

On December 8, 2009, the Company completed the acquisition of First Jones Bancorporation. On November 30, 2009, First State Bank, Jones, the subsidiary bank, had approximately $36 million in assets, $31 million in deposits, and $4.5 million in equity capital. First State Bank, Jones operated as a subsidiary of BancFirst Corporation until it was merged into BancFirst in early March 2010. The acquisition enhanced the presence of BancFirst in eastern Oklahoma County. The acquisition did not have a material effect on the Company’s consolidated financial statements.

In November 2009, the Federal Deposit Insurance Corporation (“FDIC”) issued a rule that required insured depository institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. In December 2009, the Company paid $20.2 million in prepaid risk-based assessments, which included $1.2 million related to the fourth quarter of 2009 that would have otherwise been payable in the first quarter of 2010. This amount was included in deposit insurance expense for 2009. Prepaid deposit insurance of approximately $15.0 million and $19.0 million was included in other assets in the accompanying consolidated balance sheets for the years ended December 31, 2010 and 2009, respectively.

In May 2009 the FDIC imposed a Special Assessment on member financial institutions that was based on June 30, 2009 assets less tier one capital. The amount of $1.9 million was expensed on June 30, 2009.

In November 2008 the Company announced it would not accept funds from the U.S. Treasury’s Capital Purchase Program due to current capital levels that exceeded well-capitalized guidelines and the potential for additional governmental regulation related to the program. Also, the Company did not elect to participate in the Debt Guarantee Program for newly issued senior unsecured debt. The Company did elect to participate in the Transaction Account Guarantee Program for extended coverage on noninterest-bearing transaction deposit accounts through June 30, 2010.

(3) CASH, DUE FROM BANKS, INTEREST-BEARING DEPOSITS AND FEDERAL FUNDS SOLD

The Company maintains accounts with various other financial institutions and the Federal Reserve Bank, primarily for the purpose of clearing cash items. It also sells Federal funds to certain of these institutions on an overnight basis. At December 31, 2010 and 2009 the Company had no significant concentrations of credit risk. At December 31, 2010, the Company maintained excess funds with the Federal Reserve Bank totaling $1.1 billion compared to $863 million at December 31, 2009.

The Company is required, as a matter of law, to maintain a reserve balance in the form of vault cash or cash on deposit with the Federal Reserve Bank. The average amount of required reserves for each of the years ended December 31, 2010 and 2009 was approximately $46.0 million and $41.6 million, respectively.

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(4) SECURITIES

The following table summarizes securities held for investment and securities available for sale:


	December 31,
	2010		2009
	(dollars in thousands)
Held for investment at cost (market value: $22,640 and $30,736, respectively)	$	22,011	$	29,796
Available for sale, at market value		724,332		387,376

Total	$	746,343	$	417,172

The following table summarizes the amortized cost and estimated market values of securities held for investment:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
	(dollars in thousands)
December 31, 2010
U.S. treasury and other federal agencies	$	1,207	$	82	$	—		$	1,289
States and political subdivisions		20,804		556		(9	)		21,351

Total	$	22,011	$	638	$	(9	)	$	22,640

December 31, 2009
U.S. Treasury and other federal agencies	$	1,446	$	74	$	—		$	1,520
States and political subdivisions		28,350		874		(8	)		29,216

Total	$	29,796	$	948	$	(8	)	$	30,736

The following table summarizes the amortized cost and estimated market values of securities available for sale:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
	(dollars in thousands)
December 31, 2010
U.S. treasuries	$	64,962	$	8	$	—		$	64,970
U.S. federal agencies (1)		560,247		11,177		(719	)		570,705
Mortgage backed securities		10,779		222		(11	)		10,990
States and political subdivisions		65,115		235		(1,140	)		64,210
Other securities (2)		10,226		3,653		(422	)		13,457

Total	$	711,329	$	15,295	$	(2,292	)	$	724,332

December 31, 2009
U.S. treasuries	$	921	$	—	$	—		$	921
U.S. federal agencies (1)		324,297		14,561		(268	)		338,590
Mortgage backed securities		7,137		208		(19	)		7,326
States and political subdivisions		9,390		235		—			9,625
Other securities (2)		28,672		2,563		(321	)		30,914

Total	$	370,417	$	17,567	$	(608	)	$	387,376

(1)	Primarily consists of FHLMC, FNMA, GNMA and mortgage backed securities through U.S. agencies.

(2)	Primarily consists of government guaranteed corporate bonds, FHLB stock and equity securities.

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The maturities of securities held for investment and available for sale are summarized in the following table using contractual maturities. Actual maturities may differ from contractual maturities due to obligations that are called or prepaid. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.


	December 31,
	2010				2009
	Amortized Cost		Estimated Market Value		Amortized Cost		Estimated Market Value
	(dollars in thousands)
Held for Investment
Contractual maturity of debt securities:
Within one year	$	5,722	$	5,779	$	7,869	$	7,938
After one year but within five years		12,815		13,267		18,314		19,129
After five years but within ten years		2,483		2,528		3,502		3,561
After ten years		991		1,066		111		108

Total	$	22,011	$	22,640	$	29,796	$	30,736

Available for Sale
Contractual maturity of debt securities:
Within one year	$	360,682	$	362,149	$	60,684	$	61,224
After one year but within five years		168,310		177,781		234,299		249,061
After five years but within ten years		69,276		68,389		14,882		14,875
After ten years		102,914		102,635		51,906		51,708

Total debt securities		701,182		710,954		361,771		376,868
Equity securities		10,147		13,378		8,646		10,508

Total	$	711,329	$	724,332	$	370,417	$	387,376

The following is a detail of proceeds from sales, realized securities gains and losses, and impairments on available for sale securities:


	Year Ended December 31,
	2010		2009		2008
	(dollars in thousands)
Proceeds	$	5,783	$	7,413	$	89,455
Gross gains realized		528		380		6,938
Gross losses realized		204		44		—

Securities having book values of $628.9 million and $292.8 million at December 31, 2010 and 2009, respectively, were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law.

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A total of 206 and 39 securities had unrealized losses at December 31, 2010 and 2009 respectively. These securities, with unrealized losses, segregated by the duration of the unrealized loss, were as follows:


	Less than 12 Months				More than 12 Months				Total
	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
	(dollars in thousands)
December 31, 2010
Held for Investment
U.S. federal agencies	$	—	$	—	$	—	$	—	$	—	$	—
States and political subdivisions		105		—		521		9		626		9

Total	$	105	$	—	$	521	$	9	$	626	$	9

Available for Sale
U.S. federal agencies	$	20,442	$	23	$	59,703	$	1,129	$	80,145	$	1,152
States and political subdivisions		357		2		51,973		1,138		52,330		1,140

Total	$	20,799	$	25	$	111,676	$	2,267	$	132,475	$	2,292

December 31, 2009
Held for Investment
U.S. federal agencies	$	1	$	—	$	—	$	—	$	1	$	—
States and political subdivisions		157		—		518		8		675		8

Total	$	158	$	—	$	518	$	8	$	676	$	8

Available for Sale
U.S. federal agencies	$	38,866	$	287	$	151	$	—	$	39,017	$	287
States and political subdivisions		2,243		321		920		—		3,163		321

Total	$	41,109	$	608	$	1,071	$	—	$	42,180	$	608

Management has the ability and intent to hold the securities classified as held for investment until they mature, at which time the Company will receive full value for the securities. Furthermore, as of December 31, 2010 and 2009, the Company also had the ability and intent to hold the securities classified as available for sale for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality and therefore has not recognized any impairment in the Company’s consolidated income statement.

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(5) LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:


	December 31,
	2010					2009
	Amount		Percent			Amount		Percent
	(dollars in thousands)
Commercial and industrial	$	549,050		19.53	%	$	515,762		18.83	%
Oil & gas production & equipment		94,535		3.36			84,199		3.07
Agriculture		87,879		3.13			83,519		3.05
State and political subdivisions:
Taxable		9,627		0.34			12,066		0.44
Tax-exempt		10,301		0.37			8,840		0.32
Real Estate:
Construction		230,367		8.19			201,704		7.37
Farmland		93,137		3.31			85,620		3.13
One to four family residences		608,786		21.65			569,592		20.80
Multifamily residential properties		31,257		1.11			29,964		1.09
Commercial		797,564		28.36			765,911		27.97
Consumer		273,277		9.73			352,477		12.88
Other		26,184		0.92			29,000		1.05

Total loans	$	2,811,964		100.00	%	$	2,738,654		100.00	%

Loans held for sale (included above)	$	11,776				$	94,140

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 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.

Loans held for sale include $82.4 million of guaranteed student loans as of December 31, 2009. Student loans are classified as consumer loans in the preceding table and valued at the lower of cost or market. On March 21, 2010, Congress passed student loan reform legislation centralizing student lending in a governmental agency, which as of June 30, 2010 resulted in an end to the student loan programs provided by the Company. During October 2010 the Company sold student loans held for sale of approximately $144.5 million. As of December 31, 2010, the Company had no student loans held for sale and has approximately $56.3 million of student loans held for investment.

Appraisal Policy

An updated appraisal of the collateral is obtained when a loan is first identified as a problem loan. Appraisals are reviewed annually and are updated as needed, or are updated more frequently if significant changes are believed to have occurred in the collateral or market conditions.

Nonaccrual Policy

The Company does not accrue interest on (1) any loan upon which a default of principal or interest has existed for a period of ninety (90) days or over unless the collateral margin or guarantor support are such that full collection of principal and interest are not in doubt, and an orderly plan for collection is in process; and (2) any other loan for which it is expected full collection of principal and interest is not probable.

A-42

A nonaccrual loan may be restored to an accrual status when none of its principal and interest is past due and unpaid or otherwise becomes well secured and in the process of collection and when prospects for future contractual payments are no longer in doubt. With the exception of a formal debt forgiveness agreement, no loan which has had principal charged-off shall be restored to accrual status unless the charged-off principal has been recovered.

Nonaccrual loans totaled $26.7 million at December 31, 2010 and $37.1 million at December 31, 2009. Had nonaccrual loans performed in accordance with their original contract terms, the Company would have recognized additional interest income of approximately $1.0 million in 2010, $1.4 million in 2009 and $1.4 million in 2008.

Accruing loans past due more than 90 days totaled $1.1 million at December 31, 2010 and $900,000 at December 31, 2009. Restructured loans outstanding totaled $300,000 at December 31, 2010 and $2.0 million at December 31, 2009. Net interest income for 2010 included nonrecurring interest income of $1.3 million.

Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate the credit risk component in the allowance for loan losses.

The following table is a summary of amounts included in nonaccrual loans, segregated by class of loans. Residential real estate refers to one-to-four family real estate.


	As of December 31, 2010
	(dollars in thousands)
Non-residential real estate	$	11,343
Residential real estate		7,033
Non-consumer non-real estate		1,586
Consumer non-real estate		297
Other loans		4,574
Acquired loans		1,868

Total	$	26,701

The following table presents an age analysis of past due loans, segregated by class of loans:


	Age Analysis of Past Due Receivables
	As of December 31, 2010
	30-89 Days Past Due		Greater than 90 Days		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 Days or More Past Due
	(dollars in thousands)
Non-residential real estate	$	3,806	$	2,150	$	5,956	$	905,782	$	911,738	$	559
Residential real estate		4,625		3,018		7,643		665,245		672,888		212
Non-consumer non-real estate		4,844		729		5,573		690,674		696,247		39
Consumer non-real estate		2,240		168		2,408		196,666		199,074		94
Other loans.		3,402		4,075		7,477		147,826		155,303		—
Acquired loans		1,528		1,635		3,163		173,551		176,714		192

Total	$	20,445	$	11,775	$	32,220	$	2,779,744	$	2,811,964	$	1,096

A-43

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect the full amount of scheduled principal and interest payments in accordance with the original contractual terms of the loan agreement. If a loan is impaired, a specific valuation allowance may be allocated if necessary so that the loan is reported net at the present value of future cash flows using the loan’s existing rate or the fair value of collateral if repayment is expected solely from the collateral. When it is not deemed necessary to allocate a specific valuation allowance to an impaired loan, the loan nevertheless has an allowance based on a historically adequate percentage determined for the class of loans.

The following table presents impaired loans, segregated by class of loans as of December 31, 2010. No interest income was recognized on impaired loans subsequent to their classification as impaired.


	Unpaid Principal Balance		Recorded Investment with Allowance		Related Allowance		Average Recorded Investment
	(dollars in thousands)
Non-residential real estate	$	12,364	$	11,343	$	1,046	$	20,975
Residential real estate		7,861		7,033		1,770		6,363
Non-consumer non-real estate		2,492		1,586		451		1,804
Consumer non-real estate		308		297		102		291
Other loans		4,644		4,574		143		3,605
Acquired loans		1,967		1,868		—		525

Total	$	29,636	$	26,701	$	3,512	$	33,563

Credit Risk Monitoring and Loan Grading

The Company employs several means to monitor the risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical loan loss experience, and economic conditions.

Loans are subject to an internal risk grading system which indicates the risk and acceptability of that loan. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions.

The general characteristics of the risk grades are as follows:

Grade 1 – Acceptable—Loans graded 1 represent reasonable and satisfactory credit risk which requires normal attention and supervision. Capacity to repay through primary and/or secondary sources is not questioned.

Grade 2 – Acceptable—Increased Attention—This category consists of loans that have credit characteristics deserving management’s close attention. These potential weaknesses could result in deterioration of the repayment prospects for the loan or the Bank’s credit position at some future date. Such credit characteristics include loans to highly leveraged borrowers in cyclical industries, adverse financial trends which could potentially weaken repayment capacity, loans that have fundamental structure deficiencies, loans lacking secondary sources of repayment where prudent, and loans with deficiencies in essential documentation, including financial information.

Grade 3—Problem Loans/Assets—Performing—This category consists of performing loans which are considered to be problems. Loans in this category would generally include, but not be limited to, borrowers with a weakened financial condition or poor performance history, past dues, loans restructured to reduce payments and/or loans with severe documentation problems. In general, these loans have no identifiable loss potential in the near future, however, the possibility of a loss developing is heightened.

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Grade 4—Problem Loans/Assets—Nonperforming—This category consists of nonperforming loans/assets which are considered to be problems. Nonperforming loans are described as being 90 days and over past due and still accruing, and loans that are nonaccrual. Other nonperforming assets in this category will be other real estate and repossessed assets which formerly secured loans.

Grade 5—Loss Potential—This category consists of loans/assets which are considered to possess loss potential. While the loss may not occur in the current year, management expects that loans/assets in this category will ultimately result in a loss, unless substantial improvement occurs.

Grade 6—Charge Off—This category consists of loans that are considered uncollectible and other assets with little or no value.

The following table presents internal loan grading by class of loans as of December 31, 2010:


	Grade
	1		2		3		4		5		Total
	(dollars in thousands)
Non-residential real estate	$	782,616	$	89,501	$	29,159	$	10,462	$	—	$	911,738
Residential real estate		578,003		74,737		12,833		7,315		—		672,888
Non-consumer non-real estate		595,071		87,400		11,707		2,069		—		696,247
Consumer non-real estate		188,919		7,865		2,098		189		3		199,074
Other loans		146,750		3,054		1,542		3,957		—		155,303
Acquired loans		135,000		30,406		9,416		1,892		—		176,714

Total	$	2,426,359	$	292,963	$	66,755	$	25,884	$	3	$	2,811,964

Allowance for Loan Losses Methodology

The allowance for loan losses (“ALLL”) is determined by a calculation based on segmenting the loans into the following categories: (1) adversely graded loans [grades 3, 4, and 5] that have a specific reserve allocation; (2) loans without a specific reserve segmented by loans secured by real estate other than 1-4 family residential property, loans secured by 1-4 family residential property, commercial, industrial, and agricultural loans not secured by real estate, consumer purpose loans not secured by real estate, and loans over 60 days past due that are not otherwise Grade 3, 4, or 5; (3) grade 2 loans; (4) grade 1 loans; and (5) loans held for sale which are excluded.

The ALLL is calculated as the sum of the following: (1) the total dollar amount of specific reserve allocations; (2) the dollar amount derived by multiplying each segment of adversely graded loans without a specific reserve allocation times its respective reserve factor; (3) the dollar amount derived by multiplying Grade 2 loans and Grade 1 loans (less exclusions) times the respective reserve factor; and (4) other adjustments as deemed appropriate and documented by the Senior Loan Committee or Board of Directors.

The amount of the ALLL is an estimate based upon factors 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 ALLL in the near term.

A-45

Changes in the ALLL are summarized as follows:


	Year Ended December 31,
	2010			2009			2008
	(dollars in thousands)
Balance at beginning of period	$	36,383		$	34,290		$	29,127

Charge-offs		(4,180	)		(8,953	)		(6,275	)
Recoveries		588			657			762

Net charge-offs		(3,592	)		(8,296	)		(5,513	)

Provisions charged to operations		2,954			10,389			10,676

Balance at end of period	$	35,745		$	36,383		$	34,290

The following table details activity in the ALLL by class of loans for the year ended December 31, 2010. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


	Non-Residential Real Estate			Residential Real Estate			Non- Consumer Non-Real Estate			Consumer Non-Real Estate			Other Loans			Acquired Loans			Total
	(dollars in thousands)
Allowance for credit losses:
Beginning balance	$	14,044		$	8,963		$	9,454		$	2,441		$	1,481		$	—		$	36,383
Charge-offs		(1,687	)		(1,102	)		(477	)		(520	)		(241	)		(153	)		(4,180	)
Recoveries		72			71			213			118			48			66			588

Net charge-offs		(1,615	)		(1,031	)		(264	)		(402	)		(193	)		(87	)		(3,592	)
Provisions charged to operations		713			1,025			397			262			470			87			2,954

Balance at end of year	$	13,142		$	8,957		$	9,587		$	2,301		$	1,758		$	—		$	35,745

Ending balances:
Individually evaluated for impairment	$	3,986		$	1,874		$	2,261		$	321		$	242		$	—		$	8,684
Collectively evaluated for impairment		9,156			7,083			7,326			1,980			1,516			—			27,061

Balance at end of year	$	13,142		$	8,957		$	9,587		$	2,301		$	1,758		$	—		$	35,745

Loans—Ending balances:
Individually evaluated for impairment	$	40,566		$	19,987		$	10,517		$	2,613		$	447		$	—		$	74,130
Collectively evaluated for impairment		871,172			652,901			685,730			196,461			154,856			165,406			2,726,526
Loans acquired with deteriorated credit quality		—			—			—			—			—			11,308			11,308

Balance at end of year	$	911,738		$	672,888		$	696,247		$	199,074		$	155,303		$	176,714		$	2,811,964

A-46

The following table is a summary of amounts included in the ALLL for impaired loans with specific reserves and the recorded balance of the related loans. The average recorded investment in all impaired loans with specific reserves was $9.0 million in 2010, $9.4 million in 2009 and $8.9 million in 2008. No material amounts of interest income were collected on impaired loans with specific reserves for 2010, 2009 or 2008.


	Year Ended December 31,
	2010		2009		2008
	(dollars in thousands)
Allowance for loss on impaired loans	$	3,040	$	1,782	$	1,599
Recorded balance of impaired loans		10,510		7,423		11,400

Transfers from Loans

Transfers from loans to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow. Such transfers totaled $18.8 million, $13.4 million and $5.5 million for the years ended December 31, 2010, 2009 and 2008, respectively.

Related Party Loans

The Company has made loans in the ordinary course of business to the executive officers and directors of the Company and to certain affiliates of these executive officers and directors. Management believes that all such loans were made on substantially the same terms as those prevailing at the time for comparable transactions with other persons and do not represent more than a normal risk of collectibility or present other unfavorable features. A summary of these loans is as follows:


Year Ended December 31,	Balance Beginning of the Period		Additions		Collections/ Terminations			Balance End of the Period
(dollars in thousands)
2010	$	20,222	$	36,968	$	(35,903	)	$	21,287
2009	$	21,918	$	35,132	$	(36,828	)	$	20,222
2008	$	15,808	$	50,282	$	(44,172	)	$	21,918

(6) PREMISES AND EQUIPMENT, NET

The following is a summary of premises and equipment by classification:


	Estimated Useful Lives		December 31,
	Estimated Useful Lives		2010			2009
			(dollars in thousands)
Land			$	23,593		$	21,921
Buildings		10 to 40 years		103,064			96,870
Furniture, fixtures and equipment		3 to 15 years		53,636			57,666
Accumulated depreciation				(82,497	)		(84,663	)

Premises and equipment, net			$	97,796		$	91,794

A-47

(7) INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets:


	December 31,
	2010					2009
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(dollars in thousands)
Core deposit intangibles	$	11,586	$	(4,343	)	$	7,222	$	(3,558	)
Customer relationship intangibles		5,657		(1,290	)		4,448		(968	)

Total	$	17,243	$	(5,633	)	$	11,670	$	(4,526	)

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


Amortization
Year ended December 31:
2010	$	1,107
2009		920
2008		902

Estimated Amortization
Year ending December 31:
2011	$	1,507
2012		1,507
2013		1,340
2014		1,123
2015		1,116

At December 31, 2010, the weighted-average remaining life all intangible assets was 8.6 years which consisted of customer relationship intangibles with a weighted-average life of 13.3 years and core deposit intangibles with a weighted-average life of 6.7 years.

The following is a summary of goodwill by business segment:


	Metropolitan Banks		Community Banks			Other Financial Services		Executive, Operations & Support			Consolidated
	(dollars in thousands)
Year Ended December 31, 2010
Balance at beginning of period	$	6,150	$	23,652		$	4,258	$	624		$	34,684
Acquisitions		1,929		7,032			1,206		—			10,167
Adjustments		—		(177	)		—		(126	)		(303	)

Balance at end of period	$	8,079	$	30,507		$	5,464	$	498		$	44,548

Year Ended December 31, 2009
Balance at beginning of period	$	6,150	$	23,295		$	4,258	$	624		$	34,327
Acquisitions		—		357			—		—			357

Balance at end of period	$	6,150	$	23,652		$	4,258	$	624		$	34,684

A-48

(8) TIME DEPOSITS

Certificates of deposit in denominations of $100,000 or more totaled $409 million and $380 million at December 31, 2010 and 2009, respectively. At December 31, 2010, the scheduled maturities of all certificates of deposit are as follows (dollars in thousands):


2011	$	703,099
2012		123,830
2013		34,755
2014		24,184
2015		19,130
Thereafter		317

Total	$	905,315

(9) SHORT-TERM BORROWINGS

The following is a summary of short-term borrowings:


	December 31,
	2010			2009
	(dollars in thousands)
Federal funds purchased	$	6,000		$	100
Repurchase agreements		1,250			—

Total	$	7,250		$	100

Weighted average interest rate		0.14	%		0.38	%

End of period interest rate		0.18	%		0.20	%

Federal funds purchased represents borrowings of overnight funds from other financial institutions.

The Company enters into sales of securities to certain of its customers with simultaneous agreements to repurchase. These agreements represent an overnight borrowing of funds.

(10) LONG-TERM BORROWINGS

On December 13, 2010, the Company borrowed $14.5 million from a commercial bank for a three year term. The loan has an interest rate of 3% per annum, payable quarterly on the first day of March, June, September and December until the maturity date of November 30, 2013, at which time the entire unpaid balance including all accrued and unpaid interest would be due and payable. A scheduled principal reduction payment will be made on or before November 30, 2011 and November 30, 2012 equal to 25% of the unpaid principal amount outstanding. The loan may be prepaid in whole or in part without fee or penalty at any time. The proceeds were used to fund a portion of the Company’s recent acquisitions.

A-49

The following shows the contractual maturities of the long-term borrowings:


	December 31,
	2010		2009
	(dollars in thousands)
2011	$	7,906	$	—
2012		9,013		—
2013		13,346		—
2014		4,000		—

Total	$	34,265	$	—

(11) JUNIOR SUBORDINATED DEBENTURES

In January 2004, BancFirst Corporation established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. BancFirst Corporation owns all of the common securities of BFC II. In February 2004, BFC II issued $25 million of aggregate liquidation amount of 7.20% Cumulative Trust Preferred Securities (the “Cumulative Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $1 million in Cumulative Trust Preferred Securities through the execution of an over-allotment option. The proceeds from the sale of the Cumulative Trust Preferred Securities and the common securities of BFC II were invested in $26.8 million of 7.20% Junior Subordinated Debentures of BancFirst Corporation. Interest payments on the $26.8 million of 7.20% Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the $26.8 million of 7.20% Junior Subordinated Debentures is March 31, 2034, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Cumulative Trust Preferred Securities represent an undivided interest in the $26.8 million of 7.20% Junior Subordinated Debentures and are guaranteed by BancFirst Corporation. During any deferral period or during any event of default, BancFirst Corporation may not declare or pay any dividends on any of its capital stock. In March 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the Tier 1 capital of bank holding companies. The Cumulative Trust Preferred Securities were callable at par, in whole or in part, after March 31, 2009.

A-50

(12) INCOME TAXES

The components of the Company’s income tax expense (benefit) are as follows:


	Year Ended December 31,
	2010			2009		2008
	(dollars in thousands)
Current taxes:
Federal	$	20,240		$	13,886	$	21,870
State		3,155			1,717		2,407
Deferred taxes		(58	)		467		(825	)

Total income taxes	$	23,337		$	16,070	$	23,452

Income tax expense applicable to securities transactions approximated $106,000, $134,000 and $2.7 million for the years ended December 31, 2010, 2009 and 2008, respectively.

A reconciliation of tax expense at the federal statutory tax rate applied to income before taxes is presented in the following table:


	Year Ended December 31,
	2010			2009			2008
	(dollars in thousands)
Tax expense at the federal statutory tax rate	$	22,976		$	17,038		$	23,733
Increase (decrease) in tax expense from:
Tax-exempt income, net		(648	)		(701	)		(714	)
State tax expense, net of federal tax benefit		3,098			1,737			2,379
Federal tax credits		(1,914	)		(1,709	)		(1,741	)
Other, net		(175	)		(295	)		(205	)

Total tax expense	$	23,337		$	16,070		$	23,452

The net deferred tax liability consisted of the following:


	December 31,
	2010			2009
	(dollars in thousands)
Provision for loan losses	$	13,014		$	12,733
Discount on securities of banks acquired		(1,308	)		(35	)
Write-downs of other real estate owned		247			69
Deferred compensation		1,499			878
Other		2,420			1,947

Gross deferred tax assets		15,872			15,592

Unrealized net gains on securities available for sale		(4,551	)		(5,915	)
Basis difference related to tax credits		(3,875	)		(3,269	)
Depreciation		(3,326	)		(2,915	)
Leveraged lease		(3,350	)		(3,711	)
Other		(2,629	)		(2,376	)

Gross deferred tax liabilities		(17,731	)		(18,186	)

Net deferred tax liability	$	(1,859	)	$	(2,594	)

A-51

The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in income tax expense. During the years ended December 31, 2010, 2009 and 2008, the Company did not recognize or accrue any interest and penalties related to unrecognized tax benefits. Federal and various state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination which includes the years 2008 to 2010. The Company has no open examinations with either the Internal Revenue Service or any state agency.

Management performs an analysis of the Company’s tax position annually and believes it is more likely than not that all of its tax positions will be utilized in future years.

(13) SHARE-BASED COMPENSATION

BancFirst Corporation adopted a nonqualified incentive stock option plan (the “BancFirst ISOP”) in May 1986. The Company amended the BancFirst ISOP to increase the number of shares to be issued under the plan to 2,650,000 shares in May 2009. At December 31, 2010, 69,860 shares were available for future grants. The BancFirst ISOP will terminate December 31, 2014. The options are exercisable beginning four years from the date of grant at the rate of 25% per year for four years. Options expire at the end of fifteen years from the date of grant. Options outstanding as of December 31, 2010 will become exercisable through the year 2017. 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. The Company amended the BancFirst Directors’ Stock Option Plan to increase the number of shares to be issued under the plan to 205,000 shares in May 2009. At December 31, 2010, 50,000 shares were 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 December 31, 2010 will become exercisable through the year 2011. 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.

During 2009, the Company repriced stock options granted under the BancFirst ISOP that were held by 27 optionees through an exchange of certain issued and outstanding stock options for new options. The new options were issued with an exercise price equal to the market price of the Company’s common stock at the effective date of the exchange and were subject to the seven-year vesting and 15-year term as provided by the plan. The Company’s compensation expense related to these options for the year ended December 31, 2009 was reduced by approximately $14,000 due to the unamortized value of the old options being amortized over a new seven-year vesting period. The total incremental compensation expense of $565,000 due to the repricing will be recognized over the seven-year vesting period of the new options.

A-52

The following is a summary of the activity under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:


	Options			Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term		Aggregate Intrinsic Value
	(dollars in thousands, except per share data)
Year Ended December 31, 2010
Outstanding at December 31, 2009		1,209,553		$	27.41
Options granted		49,000			41.64
Options exercised		(74,972	)		21.49
Options canceled, forfeited, or expired		(11,400	)		33.59

Outstanding at December 31, 2010		1,172,181			28.32		8.58	$	15,085

Exercisable at December 31, 2010		699,656			21.95		6.13	$	13,465

Year Ended December 31, 2009
Outstanding at December 31, 2008		1,092,453		$	27.80
Options granted		317,200			36.91
Options exercised		(17,600	)		21.49
Options canceled, forfeited, or expired		(182,500	)		46.87

Outstanding at December 31, 2009		1,209,553			27.41		9.15	$	11,651

Exercisable at December 31, 2009		687,939			20.63		6.87	$	11,292

The following table has additional information regarding options granted and options exercised under both the BancFirst ISOP and the BancFirst Directors’ Stock Option Plan:


	Year Ended December 31,
	2010		2009		2008
	(dollars in thousands, except per share data)
Weighted average grant-date fair value per share of options granted	$	15.69	$	20.37	$	20.24
Total intrinsic value of options exercised		1,445		314		3,391
Cash received from options exercised		1,611		378		1,940
Tax benefit realized from options exercised		559		122		1,312

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.

The Company recorded share-based employee compensation expense of approximately $1.2 million in 2010, $1.1 million in 2009 and $1.2 million in 2008.

The Company will continue to amortize the remaining fair value of these stock options of approximately $5.6 million, net of tax, over the remaining vesting period of approximately seven years. The following table shows the assumptions used for computing share-based employee compensation expense under the fair value method:

Year Ended December 31

2010

2009

2008

Risk-free interest rate

2.62% to 4.00 %

2.17% to 3.64 %

2.89% to 4.12 %

Dividend yield

2.00%

1.50%

Stock price volatility

27.28% to 38.61%

52.71% to 74.84%

38.05% to 61.53%

Expected term

10Yrs

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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.

In May 1999, the Company adopted the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “BancFirst Deferred Stock Compensation Plan”). The Company amended the BancFirst Deferred Stock Compensation Plan to increase the number of shares to be issued under the plan to 80,000 shares in May 2009. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100% of their board fees. They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member. Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account. A summary of the accumulated stock units is as follows:


	December 31,
	2010		2009
Accumulated stock units		47,971		44,540
Average price	$	32.89	$	31.91

(14) RETIREMENT PLANS

In May 1986, the Company adopted the BancFirst Corporation Employee Stock Ownership and Thrift Plan (the “401(k)/ESOP”) effective January 1, 1985. The 401(k)/ESOP covers all eligible employees, as defined in the plan, of the Company and its subsidiaries. The 401(k)/ESOP allows employees to defer up to the maximum legal limit of their compensation, of which the Company may match 50%, but not to exceed 3% of their compensation. In addition, the Company may make discretionary contributions to the 401(k)/ESOP, as determined by the Company’s Board of Directors. The aggregate amounts of contributions by the Company to the 401(k)/ESOP for the years ended December 31, 2010, 2009 and 2008, were approximately $2.8 million, $2.5 million and $3.3 million, respectively.

(15) STOCKHOLDERS’ EQUITY

The following is a description of the capital stock of the Company:

(a) Senior Preferred Stock: $1.00 par value; 10,000,000 shares authorized; no shares issued or outstanding. Shares may be issued with such voting, dividend, redemption, sinking fund, conversion, exchange, liquidation and other rights as shall be determined by the Company’s Board of Directors, without approval of the stockholders. The Senior Preferred Stock would have a preference over common stock as to payment of dividends, as to the right to distribution of assets upon redemption of such shares or upon liquidation of the Company.

(b) 10% Cumulative Preferred Stock: $5.00 par value, redeemable at the Company’s option at $5.00 per share plus accumulated dividends; non-voting; cumulative dividends at the rate of 10% payable semi-annually on January 15 and July 15; 900,000 shares authorized; no shares issued or outstanding.

(c) Common stock: $1.00 par value; 20,000,000 shares authorized. At December 31, 2010 and 2009, there were 15,368,717 shares and 15,308,741 shares issued and outstanding, respectively.

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The following table is a summary of the shares repurchased under the program:


	Year Ended December 31,
	2010		2009		2008
Number of shares repurchased		16,500		—		40,000
Average price of shares repurchased	$	36.69	$	—	$	40.70

BancFirst Corporation’s ability to pay dividends is dependent upon dividend payments received from BancFirst. Banking regulations limit bank dividends based upon net earnings retained and minimum capital requirements. Dividends in excess of these requirements require regulatory approval. At January 1, 2011, approximately $43.7 million of the equity of BancFirst was available for dividend payments to BancFirst Corporation.

During any deferral period or any event of default on the Junior Subordinated Debentures, BancFirst Corporation may not declare or pay any dividends on any of its capital stock.

The Company and BancFirst are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and FDIC. These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s and BancFirst’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. Management believes, as of December 31, 2010, that the Company and BancFirst met all capital adequacy requirements to which they are subject. The required capital amounts and the Company’s and BancFirst’s respective ratios are shown in the following table:


	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
As of December 31, 2010:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	455,668		14.68	%	$	248,379		8.00	%		N/A		N/A
BancFirst		435,083		14.57	%		238,913		8.00	%	$	298,641		10.00	%

Tier I Capital
(to Risk Weighted Assets)-
BancFirst Corporation		419,923		13.53	%		124,190		4.00	%		N/A		N/A
BancFirst		399,344		13.37	%		119,456		4.00	%		179,184		6.00	%

Tier I Capital
(to Total Assets)-
BancFirst Corporation		419,923		8.39	%		151,807		3.00	%		N/A		N/A
BancFirst		399,344		8.37	%		144,256		3.00	%		240,427		5.00	%

As of December 31, 2009:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	440,258		14.96	%	$	235,372		8.00	%		N/A		N/A
BancFirst		414,161		14.18	%		233,671		8.00	%	$	292,088		10.00	%

Tier I Capital
(to Risk Weighted Assets)-
BancFirst Corporation		403,875		13.73	%		117,686		4.00	%		N/A		N/A
BancFirst		377,779		12.93	%		116,835		4.00	%		175,253		6.00	%

Tier I Capital
(to Total Assets)-
BancFirst Corporation		403,875		9.23	%		132,483		3.00	%		N/A		N/A
BancFirst		377,779		8.71	%		131,076		3.00	%		218,461		5.00	%

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As of December 31, 2010, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst as “well capitalized” under the regulatory framework for prompt corrective action. To be well capitalized under federal bank regulatory agency definitions, a depository institution must have a Tier 1 Ratio of at least 6%, a combined Tier 1 and Tier 2 Ratio of at least 10%, and a Leverage Ratio of at least 5%. There are no conditions or events since the most recent notification of BancFirst’s capital category that management believes would change its category.

(16) NET INCOME PER COMMON SHARE

Basic and diluted net income per common share are calculated as follows:


	Income (Numerator)		Shares (Denominator)		Per Share Amount
	(dollars in thousands, except per share data)
Year Ended December 31, 2010
Basic
Income available to common stockholders	$	42,309		15,348,102	$	2.76

Effect of stock options		—		303,210

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	42,309		15,651,312	$	2.70

Year Ended December 31, 2009
Basic
Income available to common stockholders	$	32,609		15,299,781	$	2.13

Effect of stock options		—		294,008

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	32,609		15,593,789	$	2.09

Year Ended December 31, 2008
Basic
Income available to common stockholders	$	44,358		15,218,835	$	2.91

Effect of stock options		—		359,628

Diluted
Income available to common stockholders plus assumed exercises of stock options	$	44,358		15,578,463	$	2.85

The following table shows the number and average exercise price of options that were excluded from the computation of diluted net income per common share for each year because the options’ exercise prices were greater than the average market price of the common shares.


	Shares		Average Exercise Price
December 31, 2010		420,679	$	38.31
December 31, 2009		304,292	$	43.01
December 31, 2008		244,415	$	45.93

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(17) CONDENSED PARENT COMPANY FINANCIAL STATEMENTS

BALANCE SHEETS


	December 31,
	2010		2009
	(dollars in thousands)
ASSETS
Cash	$	3,088	$	14,178
Securities		217		299
Premises and equipment, net		240		—
Investments in subsidiaries		493,487		441,233
Intangible assets		498		624
Dividends receivable		4,800		4,517
Other assets		4,827		1,094

Total assets	$	507,157	$	461,945

LIABILITIES AND STOCKHOLDERS’ EQUITY
Other liabilities	$	5,197	$	4,392
Long-term borrowings		14,500		—
Junior subordinated debentures		28,866		26,804
Stockholders’ equity		458,594		430,749

Total liabilities and stockholders’ equity	$	507,157	$	461,945

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


	Year Ended December 31,
	2010			2009		2008
	(dollars in thousands)
OPERATING INCOME
Dividends from subsidiaries	$	17,762		$	16,609	$	16,070
Interest on interest-bearing deposits		153			228		281
Other		(190	)		—		—

Total operating income		17,725			16,837		16,351

OPERATING EXPENSE
Interest		2,016			1,966		1,966
Other		299			236		189

Total operating expense		2,315			2,202		2,155

Income before taxes and equity in undistributed earnings of subsidiaries		15,410			14,635		14,196
Allocated income tax benefit		689			733		956

Income before equity in undistributed earnings of subsidiaries		16,099			15,368		15,152
Equity in undistributed earnings of subsidiaries		26,210			17,241		29,206

Net income	$	42,309		$	32,609	$	44,358

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STATEMENTS OF CASH FLOW


	Year Ended December 31,
	2010			2009			2008
	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	42,309		$	32,609		$	44,358
Adjustments to reconcile to net cash provided by operating activities:
Equity in undistributed earnings of subsidiaries		(27,428	)		(18,280	)		(29,206	)
Amortization of stock based compensation arrangements		1,218			1,038			1,192
Other, net		(1,790	)		450			(794	)

Net cash provided by operating activities		14,309			15,817			15,550

INVESTING ACTIVITIES
Net cash used for acquisitions		(26,934	)		(5,452	)		—
Purchases of securities		—			—			(13	)
Sales and maturities of held for investment and available for sale securities		200			—			—

Net cash used for investing activities		(26,734	)		(5,452	)		(13	)

FINANCING ACTIVITIES
Issuance of common stock		2,173			740			2,970
Acquisition of common stock		(605	)		—			(1,634	)
Cash dividends paid		(14,733	)		(13,774	)		(12,785	)
Issuance of long-term borrowings		14,500			—			—

Net cash used for financing activities		1,335			(13,034	)		(11,449	)

Net (decrease) increase in cash		(11,090	)		(2,669	)		4,088
Cash at the beginning of the period		14,178			16,847			12,759

Cash at the end of the period	$	3,088		$	14,178		$	16,847

SUPPLEMENTAL DISCLOSURE
Cash paid during the period for interest	$	2,039		$	1,966		$	1,966

Cash received during the period for income taxes, net	$	1,089		$	1,366		$	2,317

(18) RELATED PARTY TRANSACTIONS

Refer to Note (5) for information regarding loan transactions with related parties.

(19) COMMITMENTS AND CONTINGENT LIABILITIES

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include loan commitments and standby letters of credit which involve elements of credit and interest-rate risk to varying degrees. The Company’s exposure to credit loss in the event of nonperformance by the other party to the instrument is represented by the instrument’s contractual amount. To control this credit risk, the Company uses the same underwriting standards as it uses for loans recorded on the balance sheet. The amounts of financial instruments with off-balance-sheet risk are as follows:


	December 31,
	2010		2009
	(dollars in thousands)
Loan commitments	$	625,970	$	638,652
Stand-by letters of credit		55,339		61,718

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Loan commitments are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Stand-by letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the instruments are expected to expire without being drawn upon, the total amounts do not necessarily represent commitments that will be funded in the future.

The Company leases office space in fourteen buildings, three parcels of land on which it owns buildings, and fifteen ATM locations. These leases expire at various dates through 2064.

The future minimum rental payments under these leases are as follows (dollars in thousands):


Year Ending December 31:
2011	$	749
2012		489
2013		305
2014		162
2015		38
Later years		626

Total	$	2,369

Rental expense on all property and equipment rented, including those rented on a monthly or temporary basis, totaled $1.0 million during each of the years ended December 31, 2010, 2009 and 2008.

The Company is a defendant in legal actions arising from normal business activities. Management believes that all legal actions against the Company are without merit or that the ultimate liability, if any, resulting from them will not materially affect the Company’s financial position, results of operations or cash flows.

(20) FAIR VALUE MEASUREMENTS

FASB ASC Topic 820 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.

Securities Available for Sale

Securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other securities available for sale including U.S. federal agencies, mortgage backed securities, and states

A-59

and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. 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 and market quotations to value its oil and gas swaps and options. The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation models.

Loans Held For Sale

The Company originates mortgage loans to be sold. 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 30 days of origination. Loans held for sale are carried at lower of cost or market. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis.

The following tables summarize financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2010 and 2009, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
December 31, 2010
Securities available for sale	$	64,970	$	645,984	$	13,378	$	724,332
Derivative assets		—		5,229		—		5,229
Derivative liabilities		—		3,664		—		3,664
Loans held for sale		—		11,776		—		11,776

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(dollars in thousands)
December 31, 2009
Securities available for sale	$	921	$	375,947	$	10,508	$	387,376
Derivative assets		—		7,544		—		7,544
Derivative liabilities		—		5,750		—		5,750
Loans held for sale		—		94,140		—		94,140

The changes in Level 3 assets measured at estimated fair value on a recurring basis during the years ended December 31, 2010 and 2009 were as follows:


	2010			2009
	(dollars in thousands)
Balance at the beginning of the year	$	10,508		$	16,345
Purchases, issuances and settlements		2,454			516
Sales		(752	)		(5,017	)
Losses included in earnings		(200	)		—
Total unrealized gains (losses)		1,368			(1,336	)

Balance at the end of the year	$	13,378		$	10,508

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The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and Due from Banks; Federal Funds Sold and Interest-Bearing Deposits

The carrying amount of these short-term instruments is a reasonable estimate of fair value.

Securities

For securities, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans

For certain homogeneous categories of loans, such as some residential mortgages, fair value is estimated using the quoted market prices for securities backed by similar loans, adjusted for differences in loan characteristics. For residential mortgage loans held for sale, the carrying amount is a reasonable estimate of fair value. The fair value of other types of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Derivatives

Derivatives are reported at fair value using dealer quotes and observable market data.

Deposits

The fair value of transaction and savings accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Short-term Borrowings

The amount payable on these short-term instruments is a reasonable estimate of fair value.

Long-term Borrowings

The fair value of fixed-rate long-term borrowings is estimated using the rates that would be charged for borrowings of similar remaining maturities.

Junior Subordinated Debentures

The fair value of junior subordinated debentures is estimated using the rates that would be charged for junior subordinated debentures of similar remaining maturities.

Loan Commitments and Letters of Credit

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the terms of the agreements. The fair value of letters of credit is based on fees currently charged for similar agreements.

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The estimated fair values of the Company’s financial instruments are as follows:


	December 31,
	2010					2009
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
	(dollars in thousands)
FINANCIAL ASSETS
Cash and due from banks	$	93,059		$	96,065	$	106,856		$	106,827
Federal funds sold and interest-bearing deposits		1,152,227			1,149,766		934,654			933,907
Securities		746,343			746,972		417,172			418,112
Loans:
Loans (net of unearned interest)		2,811,964					2,738,654
Allowance for loan losses		(35,745	)				(36,383	)

Loans, net		2,776,219			2,791,741		2,702,271			2,694,276
Derivative assets		5,229			5,229		7,544			7,544
FINANCIAL LIABILITIES
Deposits		4,503,754			4,514,182		3,929,016			3,949,068
Short-term borrowings		7,250			7,250		100			100
Long-term borrowings		34,265			33,520		—			—
Derivative liabilities		3,664			3,664		5,750			5,750
Junior subordinated debentures		28,866			31,010		26,804			26,847
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments					1,095					1,118
Letters of credit					415					463

Non-financial Assets and Non-financial Liabilities

Application of ASC Topic 820 to non-financial assets and non-financial liabilities became effective January 1, 2009. The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis include foreclosed assets (upon initial recognition or subsequent impairment), and intangible assets and other non-financial long-lived assets measured at fair value for impairment assessment. These items are evaluated at least annually for impairment, of which there was none as of December 31, 2010 or 2009. The overall level of non-financial assets and non-financial liabilities were not considered to be significant to the Company at December 31, 2010 or 2009.

The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments as defined.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Impaired loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. The impaired loans are adjusted to fair value through a specific allocation of the allowance for loan losses.

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Foreclosed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for loan losses based upon the fair value of the foreclosed asset.

Other real estate owned is remeasured at fair value subsequent to initial recognition, with any losses recognized in net expense from other real estate owned.

The following table summarizes assets measured at fair value on a nonrecurring basis as of December 31, 2010 and the related gains or losses recognized during the year:


Description	Level 1		Level 2		Level 3		Total Fair Value		Gains (Losses)
	(dollars in thousands)
Impaired loans		—		—	$	10,510	$	10,510	$	—
Foreclosed assets		—		—		222		222		—
Other real estate owned		—		—		22,956		22,956		(650	)

(21) 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. These derivatives are not designated as hedged instruments and are recorded on the Company’s consolidated balance sheet at fair value.

The Company utilizes dealer quotations and observable market data inputs to substantiate internal valuation models. The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table:


			December 31,
			2010						2009
Oil and Natural Gas Swaps and Options	Notional Units		Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
	(notional amounts and dollars in thousands)

Oil
Derivative assets		Barrels		372		$	5,417			286		$	6,138
Derivative liabilities		Barrels		(372	)		(4,627	)		(286	)		(5,682	)

Natural Gas
Derivative assets		MMBTUs		1,733		$	2,329			6,914		$	4,564
Derivative liabilities		MMBTUs		(1,733	)		(1,554	)		(6,914	)		(3,226	)

Total Fair Value	Included in
Derivative assets		Other assets					5,229						7,544
Derivative liabilities		Other liabilities					3,664						5,750

The Company recognized income related to this activity, which was included in other noninterest income of $501,000, $616,000 and $456,000 for the years ended December 31, 2010, 2009 and 2008, respectively.

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

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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 counterparties of approximately $3.2 million at December 31, 2010 and $6.1 million at December 31, 2009.

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 its subsidiary Bank related to the settlement of oil and gas positions.

(22) 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 were 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, 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.

A-64

The results of operations and selected financial information for the four business units are as follows:


	Metropolitan Banks		Community Banks		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated
	(dollars in thousands)
December 31, 2010
Net interest income (expense)	$	46,928	$	91,730	$	7,489	$	(3,371	)	$	—		$	142,776
Provision for loan losses		528		2,199		228		(1	)		—			2,954
Noninterest income		10,687		35,818		20,822		46,790			(44,198	)		69,919
Depreciation and amortization		1,628		5,269		502		1,132			—			8,531
Other expenses		26,738		66,838		18,394		23,879			(285	)		135,564

Income before taxes	$	28,721	$	53,242	$	9,187	$	18,409		$	(43,913	)	$	65,646

Total assets	$	1,534,552	$	3,298,409	$	140,854	$	611,979		$	(525,545	)	$	5,060,249

Capital expenditures	$	1,614	$	4,584	$	162	$	1,148		$	—		$	7,508

December 31, 2009
Net interest income (expense)	$	40,308	$	87,446	$	7,391	$	(3,824	)	$	—		$	131,321
Provision for loan losses		6,673		3,618		97		1			—			10,389
Noninterest income		10,501		34,543		19,025		36,833			(34,038	)		66,864
Depreciation and amortization		1,506		5,225		468		1,241			—			8,440
Other expenses		25,359		64,589		15,840		25,134			(245	)		130,677

Income before taxes	$	17,271	$	48,557	$	10,011	$	6,633		$	(33,793	)	$	48,679

Total assets	$	1,386,748	$	2,779,110	$	221,033	$	523,350		$	(494,126	)	$	4,416,115

Capital expenditures	$	1,625	$	3,088	$	91	$	1,209		$	—		$	6,013

December 31, 2008
Net interest income (expense)	$	42,067	$	93,008	$	7,159	$	(3,127	)	$	—		$	139,107
Provision for loan losses		4,048		6,330		321		(23	)		—			10,676
Noninterest income		9,922		33,207		19,574		57,123			(45,441	)		74,385
Depreciation and amortization		1,580		5,227		449		1,294			—			8,550
Other expenses		24,169		62,323		16,949		23,239			(224	)		126,456

Income before taxes	$	22,192	$	52,335	$	9,014	$	29,486		$	(45,217	)	$	67,810

Total assets	$	1,256,685	$	2,449,916	$	218,984	$	421,842		$	(480,223	)	$	3,867,204

Capital expenditures	$	4,419	$	4,809	$	290	$	3,850		$	—		$	13,368

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 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. Capital expenditures are generally charged to the business unit using the asset.

A-65

(23) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of the unaudited quarterly results of operations for the years ended December 31, 2010 and 2009 is as follows:


	Quarter
	Fourth		Third		Second		First
	(dollars in thousands, except per share data)
2010
Net interest income	$	37,172	$	36,072	$	35,670	$	33,862
Provision for loan losses		718		469		871		896
Noninterest income		18,787		18,162		17,010		15,960
Noninterest expense		39,300		35,389		34,505		34,901
Net income		10,177		11,787		11,042		9,303
Net income per common share:
Basic		0.66		0.77		0.72		0.61
Diluted		0.65		0.75		0.71		0.60

2009
Net interest income	$	34,070	$	32,952	$	32,546	$	31,753
Provision for loan losses		1,175		998		4,851		3,365
Noninterest income		16,160		17,039		17,043		16,622
Noninterest expense		33,889		35,481		35,218		34,529
Net income		9,834		9,390		6,260		7,125
Net income per common share:
Basic		0.64		0.61		0.41		0.47
Diluted		0.63		0.60		0.40		0.46

A-66

COMPANY PERFORMANCE

Presented below is a line graph which compares the percentage in the cumulative total return on the Company’s Common Stock to the cumulative total return of the NASDAQ Stock Market (U.S. Companies) Index and the NASDAQ Bank Stock Index, both as compiled by the University of Chicago Center for Research in Security Price (“CRSP”). The period presented is from January 1, 2006 through December 31, 2010. The graph assumes an investment on January 1, 2006 of $100 in the Company’s Common Stock and in each index, and that any dividends were reinvested. The values presented for each quarter during the period represent the cumulative market values of the respective investment.

LOGO

A-67

INDEX TO EXHIBITS


Exhibit Number		Exhibit
3.1		Second Amended and Restated Certificate of Incorporation of BancFirst Corporation (filed as Exhibit 1 to the Company’s 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 Article XVI, Section 1 and Article XVII, Section 1 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		Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent, including as 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 4.1 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).

4.3		Amendment No. 1 to Rights Agreement, dated as of February 25, 1999, between BancFirst Corporation and BancFirst, as Rights Agent (filed as Exhibit 4.2 to the Company’s 8-K dated January 28, 2009 and incorporated herein by reference).

4.4		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 Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

4.5		Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (filed as Exhibit D to Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

4.6		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 dated February 23, 2004, and incorporated herein by reference).

4.7		Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (filed as Exhibit 4.2 on Form S-3 to the Company’s registration statement, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).

4.8		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/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).


Exhibit Number		Exhibit

4.9*		Form of Indenture relating to the Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures, Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture, and Form of Certificate to Trustee.

10.1		Ninth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.2		Amended and Restated BancFirst Corporation Employee Stock Ownership and Thrift Plan, as amended by amendments dated September 19, 1992, November 21, 2002 and December 18, 2003 (filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and incorporated herein by reference).

10.3		Second Amended and Restated BancFirst Corporation Non-Employee Directors’ Stock Option Plan (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.4		Third Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.5		Amendment to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement adopted June 25, 2009 (filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2009 and incorporated herein by reference).

10.6		Amended and Restated BancFirst Corporation Thrift Plan adopted March 25, 2010 effective January 1, 2010 (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.7		Amendment (Code Section 415 Compliance) to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted July 23, 2009 (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.8		Amendment (Pension Protection Act, HEART Act and the Worker, Retiree, and Employer Recovery Act) to the Amended and Restated BancFirst Corporation Employee Stock Ownership Plan and Trust Agreement, adopted December 17, 2009 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2010 and incorporated herein by reference).

10.9*		Amendment to the Amended and Restated BancFirst Corporation Thrift Plan adopted December 16, 2010 effective January 1, 2011.

21.1*		Subsidiaries of Registrant.

23.1*		Consent of Independent Registered Public Accounting Firm.

31.1*		Chief Executive Officer’s Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a).

31.2*		Chief Financial Officer’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.

*	Filed herewith.