Loans Held for Investment and Allowance for Credit Losses on Loans (Tables)

6 Months Ended

Jun. 30, 2020

Summary of Loans Held for Investment by Portfolio Segment

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.

Summary of Troubled Debt Restructurings 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

Summary of Amounts Included in Nonaccrual Loans Segregated by Portfolio Segment

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

Age Analysis of Loans Held for Investments

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

Gross Loans Held for Investment by Year of Origination and Internally Assigned Credit Grades

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

Activity in Allowance for Credit Losses on Loans

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 Gross Loans Held for Investment by Collateral Type

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

Transfers from Loans and Premises and Equipment to Other Real Estate Owned and Repossessed Assets

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