	September 30, 2019					December 31, 2018
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
BancFirst
Commercial and financial:
Commercial and industrial	$	1,098,602		19.60	%	$	1,032,787		20.76	%
Oil & gas production and equipment		143,083		2.55			94,729		1.90
Agriculture		130,150		2.32			136,313		2.74
State and political subdivisions:
Taxable		71,521		1.28			76,211		1.53
Tax-exempt		52,261		0.93			48,415		0.97
Real estate:
Construction		464,341		8.28			451,224		9.07
Farmland		242,181		4.32			219,241		4.41
One to four family residences		1,010,237		18.02			979,170		19.68
Multifamily residential properties		114,558		2.04			65,949		1.33
Commercial		1,480,898		26.41			1,506,937		30.28
Consumer		355,923		6.35			328,069		6.59
Other (not classified above)		50,909		0.91			36,931		0.74
Pegasus Bank		392,144		6.99			—		—
Total loans	$	5,606,808		100.00	%	$	4,975,976		100.00	%

BancFirst’s loans are mostly to customers within Oklahoma and approximately 59% of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, 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.

BancFirst’s commercial and industrial loan category includes a small percentage of loans to companies that provide ancillary services to the oil and gas industry, such as transportation, preparation contractors and equipment manufacturers. The balance of these loans was approximately $83 million at September 30, 2019 and approximately $60 million at December 31, 2018.

Pegasus Bank’s loans are mostly to customers within Texas and approximately $209 million or 53% of the loans are secured by real estate. Pegasus Bank’s commercial and industrial loans were approximately $160 million, of which approximately $40 million were loans to companies in the oil and gas industry.

Accounting policies related to appraisals, nonaccruals and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.4 million for the nine months ended September 30, 2019 and approximately $1.7 million for the nine months ended September 30, 2018.

The Company charges interest on principal balances outstanding on restructured loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be restructured were not considered to be material.

Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate 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.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of past due loans, segregated by class of loans:

	Age Analysis of Past Due Loans
	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 Days or More Past Due
	(Dollars in thousands)
As of September 30, 2019
BancFirst
Real estate:
Non-residential real estate owner occupied	$	1,325	$	935	$	4,859	$	7,119	$	678,852	$	685,971	$	3,808
Non-residential real estate other		1,066		—		73		1,139		1,189,409		1,190,548		—
Residential real estate permanent mortgage		1,387		1,166		1,930		4,483		334,943		339,426		1,297
Residential real estate all other		2,633		665		5,694		8,992		882,771		891,763		442
Commercial and financial:
Non-consumer non-real estate		1,642		665		2,358		4,665		1,419,409		1,424,074		420
Consumer non-real estate		1,899		695		578		3,172		355,152		358,324		376
Other loans		683		737		4,340		5,760		149,582		155,342		4,340
Acquired loans		1,529		989		2,088		4,606		164,610		169,216		532
Pegasus Bank		—		879		—		879		391,265		392,144		—
Total	$	12,164	$	6,731	$	21,920	$	40,815	$	5,565,993	$	5,606,808	$	11,215
As of December 31, 2018
BancFirst
Real estate:
Non-residential real estate owner occupied	$	5,114	$	810	$	43	$	5,967	$	620,654	$	626,621	$	—
Non-residential real estate other		2,772		32		114		2,918		1,143,210		1,146,128		—
Residential real estate permanent mortgage		2,448		653		693		3,794		324,908		328,702		430
Residential real estate all other		1,728		292		2,799		4,819		822,685		827,504		612
Commercial and financial:
Non-consumer non-real estate		3,620		702		833		5,155		1,278,499		1,283,654		282
Consumer non-real estate		1,991		565		559		3,115		323,747		326,862		325
Other loans		322		158		178		658		141,251		141,909		—
Acquired loans		5,240		1,669		4,936		11,845		282,751		294,596		267
Total	$	23,235	$	4,881	$	10,155	$	38,271	$	4,937,705	$	4,975,976	$	1,916

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 of allowance for loss, 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.

The following table presents impaired loans, segregated by class of loans. During the period ended September 30, 2019 and September 30, 2018, no material amount of interest income was recognized on impaired loans subsequent to their classification as impaired.

	Impaired Loans
	Unpaid Principal Balance		Recorded Investment with Allowance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
As of September 30, 2019
BancFirst
Real estate:
Non-residential real estate owner occupied	$	12,817	$	12,566	$	450	$	9,352
Non-residential real estate other		3,873		3,593		279		2,501
Residential real estate permanent mortgage		3,060		2,768		254		2,422
Residential real estate all other		7,752		7,483		3,264		6,801
Commercial and financial:
Non-consumer non-real estate		11,853		11,237		923		11,131
Consumer non-real estate		959		826		108		718
Other loans		4,917		4,708		94		424
Acquired loans		6,108		4,603		2		7,199
Pegasus Bank		2,989		2,190		—		1,089
Total	$	54,328	$	49,974	$	5,374	$	41,637

As of December 31, 2018
BancFirst
Real estate:
Non-residential real estate owner occupied	$	7,126	$	6,933	$	202	$	7,739
Non-residential real estate other		949		757		50		6,057
Residential real estate permanent mortgage		1,789		1,545		127		1,650
Residential real estate all other		7,177		6,862		2,433		7,154
Commercial and financial:
Non-consumer non-real estate		18,507		10,977		881		12,140
Consumer non-real estate		928		829		131		846
Other loans		710		490		35		481
Acquired loans		12,846		9,864		2		11,050
Total	$	50,032	$	38,257	$	3,861	$	47,117

The Company considers various factors to monitor the credit 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.

An internal risk grading system is used to indicate the credit risk of loans. 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 disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Pegasus Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Pegasus Bank analyzes loans individually by classifying the loans as to credit risk. Pegasus Bank uses the following definitions for risk ratings:

Loans classified as a pass are loans with low to average risk. These loans are included in grade 1 and 2 for the purposes of the following table:

Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Pegasus Bank’s credit position at some future date. These loans are included in grade 3 for the purposes of the following table:

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Pegasus Bank will sustain some loss if the deficiencies are not corrected. These loans are included in grade 4 for the purposes of the following table:

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These loans, if any, would be included in grade 5 for the purposes of the following table:

	Internal Loan Grading
	Grade
		1		2		3		4		5	Total
	(Dollars in thousands)
As of September 30, 2019
BancFirst
Real estate:
Non-residential real estate owner occupied	$	531,883	$	125,467	$	26,082	$	2,539	$	—	$	685,971
Non-residential real estate other		896,692		264,421		28,669		766		—		1,190,548
Residential real estate permanent mortgage		288,714		41,332		7,104		2,225		51		339,426
Residential real estate all other		697,825		172,253		14,986		6,699		—		891,763
Commercial and financial:
Non-consumer non-real estate		1,136,324		256,992		28,590		2,168		—		1,424,074
Consumer non-real estate		333,508		21,608		2,410		798		—		358,324
Other loans		149,914		3,878		1,528		22		—		155,342
Acquired loans		98,685		59,027		7,223		4,067		214		169,216
Pegasus Bank		258,497		131,458		1,310		879		—		392,144
Total	$	4,392,042	$	1,076,436	$	117,902	$	20,163	$	265	$	5,606,808

As of December 31, 2018
BancFirst
Real estate:
Non-residential real estate owner occupied	$	451,059	$	157,715	$	16,949	$	898	$	—	$	626,621
Non-residential real estate other		932,454		188,341		25,146		187		—		1,146,128
Residential real estate permanent mortgage		279,870		39,806		7,401		1,625		—		328,702
Residential real estate all other		644,217		162,003		15,232		6,052		—		827,504
Commercial and financial:
Non-consumer non-real estate		1,000,089		264,134		15,128		4,303		—		1,283,654
Consumer non-real estate		302,217		21,600		2,255		790		—		326,862
Other loans		136,132		5,542		116		119		—		141,909
Acquired loans		156,008		109,075		20,884		8,284		345		294,596
Total	$	3,902,046	$	948,216	$	103,111	$	22,258	$	345	$	4,975,976

The allowance for loan losses (“ALL”) methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The following table details activity in the ALL by class of loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

	ALL
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provisions charged to operations		Balance at end of period
	(Dollars in thousands)
Three Months Ended September 30, 2019
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,887	$	(2	)	$	1	$	(1	)	$	72	$	6,958
Non-residential real estate other		11,287		(35	)		33		(2	)		478		11,763
Residential real estate permanent mortgage		3,325		(63	)		2		(61	)		97		3,361
Residential real estate all other		11,721		(29	)		2		(27	)		507		12,201
Commercial and financial:
Non-consumer non-real estate		15,232		(244	)		49		(195	)		347		15,384
Consumer non-real estate		3,234		(287	)		66		(221	)		261		3,274
Other loans		2,449		—			9		9			189		2,647
Acquired loans		973		(1,517	)		53		(1,464	)		767		276
Pegasus Bank		—		—			24		24			40		64
Total	$	55,108	$	(2,177	)	$	239	$	(1,938	)	$	2,758	$	55,928


Nine Months Ended September 30, 2019
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,328	$	(11	)	$	2	$	(9	)	$	639	$	6,958
Non-residential real estate other		11,027		(57	)		34		(23	)		759		11,763
Residential real estate permanent mortgage		3,261		(130	)		11		(119	)		219		3,361
Residential real estate all other		10,673		(224	)		29		(195	)		1,723		12,201
Commercial and financial:
Non-consumer non-real estate		13,151		(401	)		201		(200	)		2,433		15,384
Consumer non-real estate		3,065		(569	)		175		(394	)		603		3,274
Other loans		2,423		—			87		87			137		2,647
Acquired loans		1,461		(1,713	)		206		(1,507	)		322		276
Pegasus Bank		—		—			24		24			40		64
Total	$	51,389	$	(3,105	)	$	769	$	(2,336	)	$	6,875	$	55,928

	ALL
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provisions charged to operations			Balance at end of period
	(Dollars in thousands)
Three Months Ended September 30, 2018
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,426	$	(179	)	$	15	$	(164	)	$	164		$	6,426
Non-residential real estate other		10,705		(8	)		—		(8	)		(49	)		10,648
Residential real estate permanent mortgage		3,307		(39	)		—		(39	)		43			3,311
Residential real estate all other		10,123		(71	)		95		24			274			10,421
Commercial and financial:
Non-consumer non-real estate		15,069		(343	)		7		(336	)		(337	)		14,396
Consumer non-real estate		2,839		(294	)		70		(224	)		298			2,913
Other loans		2,328		—			6		6			88			2,422
Acquired loans		1,403		(337	)		6		(331	)		266			1,338
Total	$	52,200	$	(1,271	)	$	199	$	(1,072	)	$	747		$	51,875


Nine Months Ended September 30, 2018
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,195	$	(198	)	$	16	$	(182	)	$	413		$	6,426
Non-residential real estate other		10,519		(9	)		39		30			99			10,648
Residential real estate permanent mortgage		3,226		(101	)		26		(75	)		160			3,311
Residential real estate all other		9,672		(312	)		101		(211	)		960			10,421
Commercial and financial:
Non-consumer non-real estate		15,334		(652	)		30		(622	)		(316	)		14,396
Consumer non-real estate		2,793		(738	)		194		(544	)		664			2,913
Other loans		2,481		(2	)		30		28			(87	)		2,422
Acquired loans		1,446		(530	)		29		(501	)		393			1,338
Total	$	51,666	$	(2,542	)	$	465	$	(2,077	)	$	2,286		$	51,875

The following table details the amount of ALL by class of loans for the period presented, detailed on the basis of the impairment methodology used by the Company.

	ALL
	September 30, 2019				December 31, 2018

	Individually evaluated for impairment		Collectively evaluated for impairment		Individually evaluated for impairment		Collectively evaluated for impairment
	(Dollars in thousands)
BancFirst
Real estate:
Non-residential real estate owner occupied	$	1,110	$	5,848	$	669	$	5,659
Non-residential real estate other		1,152		10,611		1,119		9,908
Residential real estate permanent mortgage		556		2,805		505		2,756
Residential real estate all other		4,379		7,822		3,413		7,260
Commercial and financial:
Non-consumer non-real estate		3,185		12,199		2,114		11,037
Consumer non-real estate		355		2,919		374		2,691
Other loans		17		2,630		65		2,358
Acquired loans		—		276		—		1,461
Pegasus Bank		—		64		—		—
Total	$	10,754	$	45,174	$	8,259	$	43,130

The following table details the loans outstanding by class of loans for the period presented, on the basis of the impairment methodology used by the Company.

	Loans
	September 30, 2019						December 31, 2018
	Individually evaluated for impairment		Collectively evaluated for impairment		Loans acquired with deteriorated credit quality		Individually evaluated for impairment		Collectively evaluated for impairment		Loans acquired with deteriorated credit quality
	(Dollars in thousands)
BancFirst
Real estate:
Non-residential real estate owner occupied	$	28,622	$	657,349	$	—	$	17,846	$	608,775	$	—
Non-residential real estate other		29,435		1,161,113		—		25,333		1,120,795		—
Residential real estate permanent mortgage		9,380		330,046		—		9,026		319,676		—
Residential real estate all other		21,685		870,078		—		21,285		806,219		—
Commercial and financial:
Non-consumer non-real estate		30,626		1,393,448		—		19,432		1,264,222		—
Consumer non-real estate		3,208		355,116		—		3,093		323,769		—
Other loans		175		155,167		—		209		141,700		—
Acquired loans		10,504		157,761		951		22,132		265,084		7,380
Pegasus Bank		—		389,955		2,189		—		—		—
Total	$	133,635	$	5,470,033	$	3,140	$	118,356	$	4,850,240	$	7,380

Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow. Such transfers during the periods presented, are summarized as follows: