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Loans Held for Investment and Allowance for Credit Losses on Loans | 6 Months Ended
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Jun. 30, 2020
Receivables [Abstract] |
Loans Held for Investment and Allowance for Credit Losses on Loans |
(4) | LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
In connection with our adoption of ASC 326, changes were made to our primary portfolio segments to align with the methodology applied in determining the allowance under CECL. Loans held for investment are summarized by portfolio segment as follows:
| June 30, 2020 |  |  | December 31, 2019 |
| Amount |  |  | Amount |
| (Dollars in thousands) |
BancFirst |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |
Commercial real estate owner occupied | $ | 651,416 |  |  | $ | 621,188 |
Commercial real estate non-owner occupied |  | 990,180 |  |  |  | 851,200 |
Construction and development < 60 months |  | 225,598 |  |  |  | 287,138 |
Construction residential real estate < 60 months |  | 206,504 |  |  |  | 189,480 |
Residential real estate first lien |  | 860,964 |  |  |  | 834,849 |
Residential real estate all other |  | 180,839 |  |  |  | 187,647 |
Farmland |  | 256,136 |  |  |  | 246,988 |
Commercial and agricultural non-real estate |  | 1,470,523 |  |  |  | 1,499,404 |
Consumer non-real estate |  | 360,740 |  |  |  | 359,529 |
Other loans (2) |  | 987,250 |  |  |  | 154,015 |
Pegasus Bank |  | 484,804 |  |  |  | 430,705 |
Total (1) | $ | 6,674,954 |  |  | $ | 5,662,143 |
(1) Excludes accrued interest receivable of $31.0 million at June 30, 2020 and $27.4 million at December 31, 2019, that is recorded in accrued interest receivable and other assets. |
(2) Includes PPP loans of $825.1 million, net of unamortized processing fees of $26.2 million, at June 30, 2020. |
BancFirst’s loans are mostly to customers within Oklahoma and approximately 50% 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 agricultural non-real estate loan category includes upstream and midstream energy loans and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers. The balance of upstream energy loans was approximately $229 million at June 30, 2020 and approximately $189 million at December 31, 2019. The balance of midstream energy loans was approximately $45 million at June 30, 2020 and approximately $41 million at December 31, 2019. The balance of the ancillary services energy loans was approximately $78 million at June 30, 2020 and approximately $90 million at December 31, 2019. Pegasus Bank’s loans are mostly to customers within Texas and approximately $246 million or 51% of the loans are secured by real estate at June 30, 2020. Pegasus Bank’s commercial and agricultural non-real estate loan were approximately $208 million at June 30, 2020 and approximately $172 million at December 31, 2019. Pegasus Bank’s commercial and agricultural non-real estate loan category includes upstream energy loans and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers. The balance of upstream energy loans was approximately $88 million at June 30, 2020 and approximately $57 million at December 31, 2019. The balance of the ancillary services energy loans was approximately $8 million at June 30, 2020 and approximately $7 million at December 31, 2019. As of June 30, 2020, the Company reported $825.1 million in PPP loans, net of unamortized processing fees of $26.2 million and recognized $3.6 million of processing fees, which were included in interest income. Accounting policies related to appraisals, and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Troubled Debt Restructur ings and Other Real Estate Owned and Repossessed Assets The following is a summary of troubled debt restructurings and other real estate owned and repossessed assets:
|  | June 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |
|  | (Dollars in thousands) |
Troubled debt restructurings |  | $ | 3,213 |  |  | $ | 18,010 |
Other real estate owned and repossessed assets |  | $ | 4,948 |  |  | $ | 6,073 |
The Company charges interest on principal balances outstanding on troubled debt restructurings during deferral periods. The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material. Nonaccrual loans Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $983,000 for the six months ended June 30, 2020 and approximately $1.0 million for the six months ended June 30, 2019. In addition, approximately $8.0 million of nonaccrual loans are guaranteed by government agencies. The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment. Residential real estate refers to one-to-four family real estate.
|  | June 30, 2020 |
|  | (Dollars in thousands) |
BancFirst |  |  |  |
Real estate: |  |  |  |
Commercial real estate owner occupied |  | $ | 2,094 |
Commercial real estate non-owner occupied |  |  | 463 |
Construction and development < 60 months |  |  | 119 |
Construction residential real estate < 60 months |  |  | — |
Residential real estate first lien |  |  | 3,904 |
Residential real estate all other |  |  | 792 |
Farmland |  |  | 3,118 |
Commercial and agricultural non-real estate |  |  | 32,299 |
Consumer non-real estate |  |  | 247 |
Other loans |  |  | 5,841 |
Pegasus Bank |  |  | 600 |
Total |  | $ | 49,477 |
|  | December 31, 2019 |
|  | (Dollars in thousands) |
BancFirst |  |  |  |
Real estate: |  |  |  |
Non-residential real estate owner occupied |  | $ | 2,275 |
Non-residential real estate other |  |  | 1,815 |
Residential real estate permanent mortgage |  |  | 1,206 |
Residential real estate all other |  |  | 3,060 |
Non-consumer non-real estate |  |  | 2,915 |
Consumer non-real estate |  |  | 264 |
Other loans |  |  | 1,083 |
Acquired loans |  |  | 4,496 |
Pegasus Bank |  |  | 851 |
Total |  | $ | 17,965 |
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 our loans held for investment:
|  | 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 June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 415 |  |  | $ | 55 |  |  | $ | 2,037 |  |  | $ | 2,507 |  |  | $ | 648,909 |  |  | $ | 651,416 |  |  | $ | 77 |
Commercial real estate non-owner occupied |  |  | 50 |  |  |  | 112 |  |  |  | 188 |  |  |  | 350 |  |  |  | 989,830 |  |  |  | 990,180 |  |  |  | — |
Construction and development < 60 months |  |  | 952 |  |  |  | — |  |  |  | — |  |  |  | 952 |  |  |  | 224,646 |  |  |  | 225,598 |  |  |  | — |
Construction residential real estate < 60 months |  |  | 396 |  |  |  | — |  |  |  | — |  |  |  | 396 |  |  |  | 206,108 |  |  |  | 206,504 |  |  |  | — |
Residential real estate first lien |  |  | 3,587 |  |  |  | 1,316 |  |  |  | 4,575 |  |  |  | 9,478 |  |  |  | 851,486 |  |  |  | 860,964 |  |  |  | 1,945 |
Residential real estate all other |  |  | 449 |  |  |  | 171 |  |  |  | 766 |  |  |  | 1,386 |  |  |  | 179,453 |  |  |  | 180,839 |  |  |  | 63 |
Farmland |  |  | 1,649 |  |  |  | 888 |  |  |  | 3,257 |  |  |  | 5,794 |  |  |  | 250,342 |  |  |  | 256,136 |  |  |  | 763 |
Commercial and agricultural non-real estate |  |  | 19,056 |  |  |  | 4,766 |  |  |  | 4,841 |  |  |  | 28,663 |  |  |  | 1,441,860 |  |  |  | 1,470,523 |  |  |  | 2,154 |
Consumer non-real estate |  |  | 1,712 |  |  |  | 595 |  |  |  | 465 |  |  |  | 2,772 |  |  |  | 357,968 |  |  |  | 360,740 |  |  |  | 313 |
Other loans |  |  | 219 |  |  |  | 162 |  |  |  | 5,621 |  |  |  | 6,002 |  |  |  | 981,248 |  |  |  | 987,250 |  |  |  | 67 |
Pegasus Bank |  |  | — |  |  |  | — |  |  |  | 600 |  |  |  | 600 |  |  |  | 484,204 |  |  |  | 484,804 |  |  |  | — |
Total |  | $ | 28,485 |  |  | $ | 8,065 |  |  | $ | 22,350 |  |  | $ | 58,900 |  |  | $ | 6,616,054 |  |  | $ | 6,674,954 |  |  | $ | 5,382 |
As of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-residential real estate owner occupied |  | $ | 1,600 |  |  | $ | 967 |  |  | $ | 5,159 |  |  | $ | 7,726 |  |  | $ | 699,690 |  |  | $ | 707,416 |  |  | $ | 3,799 |
Non-residential real estate other |  |  | 971 |  |  |  | — |  |  |  | 1,228 |  |  |  | 2,199 |  |  |  | 1,134,976 |  |  |  | 1,137,175 |  |  |  | — |
Residential real estate permanent mortgage |  |  | 4,705 |  |  |  | 973 |  |  |  | 2,215 |  |  |  | 7,893 |  |  |  | 332,679 |  |  |  | 340,572 |  |  |  | 1,660 |
Residential real estate other |  |  | 4,496 |  |  |  | 1,028 |  |  |  | 2,541 |  |  |  | 8,065 |  |  |  | 912,767 |  |  |  | 920,832 |  |  |  | 549 |
Non-consumer non-real estate |  |  | 2,290 |  |  |  | 1,446 |  |  |  | 1,763 |  |  |  | 5,499 |  |  |  | 1,448,894 |  |  |  | 1,454,393 |  |  |  | 354 |
Consumer other |  |  | 2,829 |  |  |  | 858 |  |  |  | 592 |  |  |  | 4,279 |  |  |  | 358,075 |  |  |  | 362,354 |  |  |  | 491 |
Other loans |  |  | 1,670 |  |  |  | 8 |  |  |  | 4,613 |  |  |  | 6,291 |  |  |  | 147,724 |  |  |  | 154,015 |  |  |  | 4,426 |
Acquired loans |  |  | 2,167 |  |  |  | 1,376 |  |  |  | 3,447 |  |  |  | 6,990 |  |  |  | 147,691 |  |  |  | 154,681 |  |  |  | 555 |
Pegasus Bank |  |  | — |  |  |  | — |  |  |  | 851 |  |  |  | 851 |  |  |  | 429,854 |  |  |  | 430,705 |  |  |  | — |
Total |  | $ | 20,728 |  |  | $ | 6,656 |  |  | $ | 22,409 |  |  | $ | 49,793 |  |  | $ | 5,612,350 |  |  | $ | 5,662,143 |  |  | $ | 11,834 |
Due to the impacts of the COVID-19 pandemic, the Company has modified approximately $939.8 million in loans, most of which are secured by commercial real estate. These modifications were undertaken in response to Section 4013 of the CARES Act and the regulatory intent outlined in the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus and to provide businesses financial flexibility until the economy has time to recover to a more normal level of activity. However, these modifications, which typically involve payment modifications and forbearance, also have the effect of delaying recognition of loans that may ultimately be permanently impaired. Consequently, it is reasonable to expect that when temporary regulatory accounting relief and payment modifications cease, there will be a marked increase in credit impairment and restructured loans. The timing and extent of such consequences are impossible to ascertain at this time and are dependent on the duration of the COVID-19 pandemic, the level and success of the government’s economic stimulus, and further regulatory guidance. These modified loans are included in current loans in the table above. Credit Quality Indicators The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit 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, 2019. The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented. The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades:
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |
|  | 2020 |  | 2019 |  | 2018 |  | 2017 |  | 2016 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Total
|  | (Dollars in thousands)
As of June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | $93,204 |  | $115,392 |  | $88,126 |  | $56,119 |  | $43,573 |  | $117,406 |  | $9,505 |  | $523,325
Grade 2 |  | 16,310 |  | 31,307 |  | 12,723 |  | 10,742 |  | 13,926 |  | 29,741 |  | 3,324 |  | 118,073
Grade 3 |  | 142 |  | 107 |  | 599 |  | 1,583 |  | 495 |  | 1,380 |  | 2,742 |  | 7,048
Grade 4 |  | 47 |  | 78 |  | 879 |  | — |  | 392 |  | 1,107 |  | 467 |  | 2,970
Total commercial real estate owner occupied loans |  | 109,703 |  | 146,884 |  | 102,327 |  | 68,444 |  | 58,386 |  | 149,634 |  | 16,038 |  | 651,416
Commercial real estate non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 188,253 |  | 178,055 |  | 105,465 |  | 90,957 |  | 91,046 |  | 107,176 |  | 13,590 |  | 774,542
Grade 2 |  | 25,466 |  | 68,282 |  | 18,066 |  | 23,070 |  | 11,432 |  | 52,193 |  | 3,712 |  | 202,221
Grade 3 |  | 1,126 |  | 3,929 |  | 7,118 |  | 543 |  | 42 |  | 155 |  | 70 |  | 12,983
Grade 4 |  | — |  | 94 |  | 191 |  | — |  | — |  | 149 |  | — |  | 434
Total commercial real estate non-owner occupied loans |  | 214,845 |  | 250,360 |  | 130,840 |  | 114,570 |  | 102,520 |  | 159,673 |  | 17,372 |  | 990,180
Construction and development < 60 months |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 66,608 |  | 76,743 |  | 28,386 |  | 5,535 |  | 2,880 |  | 4,081 |  | 14,229 |  | 198,462
Grade 2 |  | 12,612 |  | 8,249 |  | 1,698 |  | 853 |  | 166 |  | 568 |  | 442 |  | 24,588
Grade 3 |  | 34 |  | 2,211 |  | 184 |  | — |  | — |  | — |  | — |  | 2,429
Grade 4 |  | — |  | 70 |  | 10 |  | 24 |  | — |  | — |  | — |  | 104
Grade 5 |  | 15 |  | — |  | — |  | — |  | — |  | — |  | — |  | 15
Total construction and development < 60 months |  | 79,269 |  | 87,273 |  | 30,278 |  | 6,412 |  | 3,046 |  | 4,649 |  | 14,671 |  | 225,598
Construction residential real estate < 60 months |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 94,678 |  | 72,479 |  | 69 |  | 22 |  | 37 |  | 32 |  | 4,727 |  | 172,044
Grade 2 |  | 18,660 |  | 11,920 |  | 114 |  | — |  | — |  | 481 |  | 32 |  | 31,207
Grade 3 |  | 1,416 |  | 1,440 |  | 397 |  | — |  | — |  | — |  | — |  | 3,253
Total construction residential real estate < 60 months |  | 114,754 |  | 85,839 |  | 580 |  | 22 |  | 37 |  | 513 |  | 4,759 |  | 206,504
Residential real estate first lien |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 135,181 |  | 176,422 |  | 94,426 |  | 76,299 |  | 56,326 |  | 169,576 |  | — |  | 708,230
Grade 2 |  | 16,067 |  | 26,417 |  | 23,633 |  | 12,417 |  | 13,232 |  | 37,470 |  | — |  | 129,236
Grade 3 |  | 3,796 |  | 2,195 |  | 1,597 |  | 1,737 |  | 2,340 |  | 6,592 |  | — |  | 18,257
Grade 4 |  | 88 |  | 815 |  | 858 |  | 301 |  | 1,105 |  | 2,023 |  | — |  | 5,190
Grade 5 |  | — |  | — |  | — |  | — |  | 51 |  | — |  | — |  | 51
Total residential real estate first lien |  | 155,132 |  | 205,849 |  | 120,514 |  | 90,754 |  | 73,054 |  | 215,661 |  | — |  | 860,964
Residential real estate all other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 13,054 |  | 17,126 |  | 13,224 |  | 9,660 |  | 6,747 |  | 13,647 |  | 32,726 |  | 106,184
Grade 2 |  | 2,064 |  | 2,381 |  | 1,545 |  | 1,997 |  | 415 |  | 2,999 |  | 59,063 |  | 70,464
Grade 3 |  | 180 |  | 890 |  | 996 |  | 161 |  | 226 |  | 386 |  | 311 |  | 3,150
Grade 4 |  | 52 |  | — |  | 74 |  | 51 |  | 34 |  | 720 |  | 40 |  | 971
Grade 5 |  | — |  | 70 |  | — |  | — |  | — |  | — |  | — |  | 70
Total residential real estate all other |  | 15,350 |  | 20,467 |  | 15,839 |  | 11,869 |  | 7,422 |  | 17,752 |  | 92,140 |  | 180,839
Farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 27,303 |  | 32,686 |  | 22,385 |  | 16,365 |  | 15,894 |  | 35,182 |  | 7,696 |  | 157,511
Grade 2 |  | 7,741 |  | 34,758 |  | 7,341 |  | 7,582 |  | 6,262 |  | 10,985 |  | 8,486 |  | 83,155
Grade 3 |  | 748 |  | 625 |  | 5,313 |  | 1,109 |  | 584 |  | 1,353 |  | 3,320 |  | 13,052
Grade 4 |  | — |  | — |  | 758 |  | 639 |  | 381 |  | 379 |  | 261 |  | 2,418
Total farmland |  | 35,792 |  | 68,069 |  | 35,797 |  | 25,695 |  | 23,121 |  | 47,899 |  | 19,763 |  | 256,136
Commercial and agricultural non-real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 245,805 |  | 218,847 |  | 148,454 |  | 114,049 |  | 56,916 |  | 48,438 |  | 310,921 |  | 1,143,430
Grade 2 |  | 52,956 |  | 46,418 |  | 31,373 |  | 9,951 |  | 8,123 |  | 27,830 |  | 95,956 |  | 272,607
Grade 3 |  | 9,530 |  | 2,634 |  | 2,494 |  | 1,473 |  | 1,517 |  | 398 |  | 4,724 |  | 22,770
Grade 4 |  | 26,681 |  | 989 |  | 836 |  | 2,361 |  | 150 |  | 266 |  | 377 |  | 31,660
Grade 5 |  | — |  | 51 |  | — |  | — |  | — |  | — |  | 5 |  | 56
Total commercial and agricultural non-real estate |  | 334,972 |  | 268,939 |  | 183,157 |  | 127,834 |  | 66,706 |  | 76,932 |  | 411,983 |  | 1,470,523
Consumer non-real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 97,332 |  | 134,078 |  | 62,491 |  | 23,064 |  | 8,531 |  | 3,601 |  | 6,040 |  | 335,137
Grade 2 |  | 5,823 |  | 8,919 |  | 5,049 |  | 1,440 |  | 822 |  | 451 |  | 268 |  | 22,772
Grade 3 |  | 207 |  | 866 |  | 574 |  | 303 |  | 127 |  | 114 |  | 15 |  | 2,206
Grade 4 |  | 17 |  | 224 |  | 211 |  | 53 |  | 49 |  | 70 |  | 1 |  | 625
Total consumer non-real estate |  | 103,379 |  | 144,087 |  | 68,325 |  | 24,860 |  | 9,529 |  | 4,236 |  | 6,324 |  | 360,740
Other loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 840,615 |  | 31,131 |  | 28,254 |  | 21,729 |  | 18,562 |  | 17,839 |  | 20,228 |  | 978,358
Grade 2 |  | — |  | — |  | 17 |  | 3,011 |  | 1,174 |  | 2,136 |  | 794 |  | 7,132
Grade 3 |  | — |  | — |  | 14 |  | 3 |  | 71 |  | 229 |  | 122 |  | 439
Grade 4 |  | — |  | — |  | 26 |  | 62 |  | 28 |  | 120 |  | 1,085 |  | 1,321
Total other loans |  | 840,615 |  | 31,131 |  | 28,311 |  | 24,805 |  | 19,835 |  | 20,324 |  | 22,229 |  | 987,250
Pegasus Bank |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | 55,924 |  | 73,386 |  | 41,076 |  | 29,680 |  | 15,297 |  | 42,601 |  | 91,378 |  | 349,342
Grade 2 |  | 17,057 |  | 34,856 |  | 7,213 |  | 22,767 |  | 4,652 |  | 8,014 |  | 38,964 |  | 133,523
Grade 3 |  | — |  | — |  | — |  | — |  | — |  | 1,339 |  | — |  | 1,339
Grade 4 |  | — |  | — |  | — |  | — |  | 600 |  | — |  | — |  | 600
Total Pegasus Bank |  | 72,981 |  | 108,242 |  | 48,289 |  | 52,447 |  | 20,549 |  | 51,954 |  | 130,342 |  | 484,804
Total loans held for investment |  | $2,076,792 |  | $1,417,140 |  | $764,257 |  | $547,712 |  | $384,205 |  | $749,227 |  | $735,621 |  | $6,674,954
Allowance for Credit Losses Methodology On January 1, 2020, the Company adopted ASC 326, which replaces the incurred loss methodology for determining its provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model. See Note (1) for additional information regarding the factors that influenced the Company’s current estimate of expected credit losses. Upon adoption, the allowance for credit losses was decreased by $3.2 million, with no impact to the consolidated statement of income. Subsequent to the adoption of ASC 326, the Company recorded a $38.9 million provision for credit losses for the first six months of 2020 utilizing the newly adopted CECL methodology, a significant increase from the first six months of 2019. The increase resulted primarily from the anticipated impact on our loan portfolio resulting from the economic outlook related to the COVID-19 pandemic and the decline in energy prices and to a lesser degree, loan growth during the first six months of 2020. Prolonged low energy prices will not only have a direct impact on the energy portfolio; it will have an indirect effect on the economies of Oklahoma and the Dallas, Texas market, including higher unemployment, with a residual effect on land values and real estate prices. The following table details activity in the allowance for credit losses on 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.
|  | Allowance for Credit Losses |
|  | Balance at beginning of period |  |  | Impact of CECL adoption |  |  | Initial allowance on loans purchased with credit deterioration |  |  | Charge- offs |  |  | Recoveries |  |  | Net charge-offs |  |  | Provision for credit losses on loans |  |  | Balance at end of period |
|  | (Dollars in thousands) |
Three Months Ended June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 4,544 |  |  | $ | — |  |  | $ | — |  |  | $ | (113 | ) |  | $ | 1 |  |  | $ | (112 | ) |  | $ | 2,198 |  |  | $ | 6,630 |
Commercial real estate non-owner occupied |  |  | 5,935 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,548 |  |  |  | 9,483 |
Construction and development < 60 months |  |  | 1,136 |  |  |  | — |  |  |  | — |  |  |  | (56 | ) |  |  | 3 |  |  |  | (53 | ) |  |  | 672 |  |  |  | 1,755 |
Construction residential real estate < 60 months |  |  | 1,618 |  |  |  | — |  |  |  | — |  |  |  | (28 | ) |  |  | — |  |  |  | (28 | ) |  |  | 669 |  |  |  | 2,259 |
Residential real estate first lien |  |  | 6,192 |  |  |  | — |  |  |  | — |  |  |  | (66 | ) |  |  | 4 |  |  |  | (62 | ) |  |  | 2,423 |  |  |  | 8,553 |
Residential real estate all other |  |  | 2,292 |  |  |  | — |  |  |  | — |  |  |  | (7 | ) |  |  | 1 |  |  |  | (6 | ) |  |  | 434 |  |  |  | 2,720 |
Farmland |  |  | 1,788 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 723 |  |  |  | 2,511 |
Commercial and agricultural non-real estate |  |  | 37,276 |  |  |  | — |  |  |  | — |  |  |  | (287 | ) |  |  | 66 |  |  |  | (221 | ) |  |  | 7,450 |  |  |  | 44,505 |
Consumer non-real estate |  |  | 3,385 |  |  |  | — |  |  |  | — |  |  |  | (235 | ) |  |  | 57 |  |  |  | (178 | ) |  |  | 1,507 |  |  |  | 4,714 |
Other loans |  |  | 2,751 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (238 | ) |  |  | 2,513 |
Pegasus Bank |  |  | 3,163 |  |  |  | — |  |  |  | — |  |  |  | 330 |  |  |  | 417 |  |  |  | 747 |  |  |  | (53 | ) |  |  | 3,857 |
Total |  | $ | 70,080 |  |  | $ | — |  |  | $ | — |  |  | $ | (462 | ) |  | $ | 549 |  |  | $ | 87 |  |  | $ | 19,333 |  |  | $ | 89,500 |
Six Months Ended June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 5,625 |  |  | $ | (2,806 | ) |  | $ | 432 |  |  | $ | (113 | ) |  | $ | 1 |  |  | $ | (112 | ) |  | $ | 3,491 |  |  | $ | 6,630 |
Commercial real estate non-owner occupied |  |  | 8,358 |  |  |  | (5,507 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,632 |  |  |  | 9,483 |
Construction and development < 60 months |  |  | 2,214 |  |  |  | (1,056 | ) |  |  | — |  |  |  | (59 | ) |  |  | 3 |  |  |  | (56 | ) |  |  | 653 |  |  |  | 1,755 |
Construction residential real estate < 60 months |  |  | 1,933 |  |  |  | (778 | ) |  |  | — |  |  |  | (29 | ) |  |  | — |  |  |  | (29 | ) |  |  | 1,133 |  |  |  | 2,259 |
Residential real estate first lien |  |  | 8,692 |  |  |  | (3,831 | ) |  |  | 7 |  |  |  | (218 | ) |  |  | 6 |  |  |  | (212 | ) |  |  | 3,897 |  |  |  | 8,553 |
Residential real estate all other |  |  | 2,767 |  |  |  | (1,408 | ) |  |  | — |  |  |  | (32 | ) |  |  | 28 |  |  |  | (4 | ) |  |  | 1,365 |  |  |  | 2,720 |
Farmland |  |  | 2,821 |  |  |  | (1,408 | ) |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,097 |  |  |  | 2,511 |
Commercial and agricultural non-real estate |  |  | 15,345 |  |  |  | 11,849 |  |  |  | 62 |  |  |  | (374 | ) |  |  | 83 |  |  |  | (291 | ) |  |  | 17,540 |  |  |  | 44,505 |
Consumer non-real estate |  |  | 3,252 |  |  |  | (622 | ) |  |  | — |  |  |  | (556 | ) |  |  | 114 |  |  |  | (442 | ) |  |  | 2,526 |  |  |  | 4,714 |
Other loans |  |  | 2,632 |  |  |  | (116 | ) |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 2 |  |  |  | (5 | ) |  |  | 2,513 |
Pegasus Bank |  |  | 599 |  |  |  | 2,488 |  |  |  | — |  |  |  | (241 | ) |  |  | 424 |  |  |  | 183 |  |  |  | 587 |  |  |  | 3,857 |
Total |  | $ | 54,238 |  |  | $ | (3,195 | ) |  | $ | 502 |  |  | $ | (1,622 | ) |  | $ | 661 |  |  | $ | (961 | ) |  | $ | 38,916 |  |  | $ | 89,500 |
|  | Allowance for Credit Losses |
|  | Balance at beginning of period |  |  | Charge- offs |  |  | Recoveries |  |  | Net charge-offs |  |  | Provision for credit losses on loans |  |  | Balance at end of period |
|  | (Dollars in thousands) |
Three Months Ended June 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-residential real estate owner occupied |  | $ | 6,655 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | (3 | ) |  | $ | 235 |  |  | $ | 6,887 |
Non-residential real estate other |  |  | 11,362 |  |  |  | (16 | ) |  |  | 1 |  |  |  | (15 | ) |  |  | (60 | ) |  |  | 11,287 |
Residential real estate permanent mortgage |  |  | 3,261 |  |  |  | (4 | ) |  |  | 4 |  |  |  | — |  |  |  | 64 |  |  |  | 3,325 |
Residential real estate all other |  |  | 11,046 |  |  |  | (143 | ) |  |  | 25 |  |  |  | (118 | ) |  |  | 793 |  |  |  | 11,721 |
Non-consumer non-real estate |  |  | 14,409 |  |  |  | (87 | ) |  |  | 85 |  |  |  | (2 | ) |  |  | 825 |  |  |  | 15,232 |
Consumer non-real estate |  |  | 3,072 |  |  |  | (162 | ) |  |  | 38 |  |  |  | (124 | ) |  |  | 286 |  |  |  | 3,234 |
Other loans |  |  | 2,408 |  |  |  | — |  |  |  | 43 |  |  |  | 43 |  |  |  | (2 | ) |  |  | 2,449 |
Acquired loans |  |  | 702 |  |  |  | (170 | ) |  |  | 149 |  |  |  | (21 | ) |  |  | 292 |  |  |  | 973 |
Total |  | $ | 52,915 |  |  | $ | (585 | ) |  | $ | 345 |  |  | $ | (240 | ) |  | $ | 2,433 |  |  | $ | 55,108 |
Six Months Ended June 30, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-residential real estate owner occupied |  | $ | 6,328 |  |  | $ | (9 | ) |  | $ | 1 |  |  | $ | (8 | ) |  | $ | 567 |  |  | $ | 6,887 |
Non-residential real estate other |  |  | 11,027 |  |  |  | (22 | ) |  |  | 1 |  |  |  | (21 | ) |  |  | 281 |  |  |  | 11,287 |
Residential real estate permanent mortgage |  |  | 3,261 |  |  |  | (67 | ) |  |  | 9 |  |  |  | (58 | ) |  |  | 122 |  |  |  | 3,325 |
Residential real estate all other |  |  | 10,673 |  |  |  | (195 | ) |  |  | 27 |  |  |  | (168 | ) |  |  | 1,216 |  |  |  | 11,721 |
Non-consumer non-real estate |  |  | 13,151 |  |  |  | (157 | ) |  |  | 152 |  |  |  | (5 | ) |  |  | 2,086 |  |  |  | 15,232 |
Consumer non-real estate |  |  | 3,065 |  |  |  | (282 | ) |  |  | 109 |  |  |  | (173 | ) |  |  | 342 |  |  |  | 3,234 |
Other loans |  |  | 2,423 |  |  |  | — |  |  |  | 78 |  |  |  | 78 |  |  |  | (52 | ) |  |  | 2,449 |
Acquired loans |  |  | 1,461 |  |  |  | (196 | ) |  |  | 153 |  |  |  | (43 | ) |  |  | (445 | ) |  |  | 973 |
Total |  | $ | 51,389 |  |  | $ | (928 | ) |  | $ | 530 |  |  | $ | (398 | ) |  | $ | 4,117 |  |  | $ | 55,108 |
Purchased Credit Deteriorated Loans The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The purchased credit deteriorated loans for the period are as follows:
|  | Loans acquired with deteriorated credit quality |
|  | (Dollars in thousands) |
For the period ended June 30, 2020 |  |  |  |
Purchase price of loans at acquisition |  | $ | 1,586 |
Allowance for credit losses at acquisition |  |  | 502 |
Par value of acquired loans at acquisition |  | $ | 2,088 |
Collateral Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows:
|  | Collateral Type |
|  | Real Estate |  |  | Business Assets |  |  | Energy Reserves |  |  | Other Assets |
|  | (Dollars in thousands) |
As of June 30, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
BancFirst |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 2,386 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial real estate non-owner occupied |  |  | 341 |  |  |  | — |  |  |  | — |  |  |  | — |
Construction and development < 60 months |  |  | 15 |  |  |  | — |  |  |  | — |  |  |  | — |
Construction residential real estate < 60 months |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential real estate first lien |  |  | 1,491 |  |  |  | — |  |  |  | — |  |  |  | — |
Residential real estate all other |  |  | 657 |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 984 |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and agricultural non-real estate |  |  | — |  |  |  | 515 |  |  |  | 28,282 |  |  |  | 760 |
Consumer non-real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 127 |
Other loans |  |  | — |  |  |  | 23 |  |  |  | — |  |  |  | — |
Pegasus Bank |  |  | 1,265 |  |  |  | — |  |  |  | — |  |  |  | — |
Total collateral-dependent loans held for investment |  | $ | 7,139 |  |  | $ | 538 |  |  | $ | 28,282 |  |  | $ | 887 |
Non-Cash Transfers from Loans and Premises and Equipment 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. Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:
|  | Six Months Ended June 30, |
|  | 2020 |  |  | 2019 |
|  | (Dollars in thousands) |
Other real estate owned |  | $ | 2,876 |  |  | $ | 2,010 |
Repossessed assets |  |  | 722 |  |  |  | 627 |
Total |  | $ | 3,598 |  |  | $ | 2,637 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI http://asc.fasb.org/subtopic&trid=2196772 + Details
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