Loans Held for Investment and Allowance for Credit Losses on Loans

12 Months Ended

Dec. 31, 2024

Loans Held for Investment and Allowance for Credit Losses on Loans

(5) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans held for investment are summarized by portfolio segment as follows:


	December 31,
	2024		2023
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	931,709	$	960,944
Commercial real estate non-owner occupied		1,578,483		1,486,420
Construction and development < 60 months		756,662		642,643
Construction residential real estate < 60 months		250,373		283,486
Residential real estate first lien		1,431,265		1,258,744
Residential real estate all other		275,461		244,696
Agriculture		449,190		427,139
Commercial non-real estate		1,363,462		1,289,452
Consumer non-real estate		478,647		476,467
Oil and gas		509,858		586,654
Total (1)	$	8,025,110	$	7,656,645
(1) Excludes accrued interest receivable of $40.9 million at December 31, 2024 and $39.4 million at December 31, 2023, that is recorded in accrued interest
receivable and other assets.

The Company's loans are currently 83% held by BancFirst and 17% held by Pegasus and Worthington. In addition, approximately 69% of the Company's 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.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments, which includes the applicable weighted average remaining life, and measures the allowance for credit losses using the vintage loss analysis adjusted for qualitative factors:


Portfolio Segments	Life (in years)
Real estate:
Commercial real estate owner occupied		9
Commercial real estate non-owner occupied		6
Construction and development < 60 months		3
Construction residential real estate < 60 months		2
Residential real estate first lien		15
Residential real estate all other		8
Agriculture		9
Commercial non-real estate		3
Consumer non-real estate		4
Oil and gas		1

These portfolio segments are separately identified because they exhibit distinctive risk characteristics, such as financial asset types, loan purpose, collateral, and industry of the borrower. A summary of our primary portfolio segments is as follows:

Commercial real estate owner occupied. Commercial real estate owner occupied are nonresidential property loans for which the primary source of repayment is the cash flow from the ongoing operations and activities conducted by the entity, or an affiliate of the entity, who owns the property. This category includes, among other loans, loans secured by office buildings, garden office buildings, manufacturing facilities, warehouse and flex warehouse facilities, hospitals, and car washes unless the property is owned by an investor who leases the property to the operator who, in turn, is not related to or affiliated with the investor.

Commercial real estate non-owner occupied. Commercial real estate non-owner occupied are nonresidential property loans where the primary source of repayment is derived from rental income associated with the property or the proceeds of the sale, refinancing, or permanent financing of the property. This category includes, among other loans, loans secured by shopping centers, office buildings, hotels/motels, nursing homes, assisted-living facilities, mini-storage warehouse facilities, and similar properties.

Construction and development < 60 months. Residential development loans include loans to develop raw land into a residential development. Advances on the loans typically include land costs, hard costs (grading, utilities, roads, etc.), soft costs (engineering fees, development fees, entitlement fees, etc.) and carrying costs until the development is completed. Upon completion of the development, the loan is typically repaid through the sale of lots to homebuilders.

Construction residential real estate < 60 months. Residential construction includes loans to builders for speculative or custom homes, as well as direct loans to individuals for construction of their personal residence. Custom construction and self-construction loans typically will have commitments in place for long-term financing at the completion of construction. Speculative construction loans generally will have periodic curtailment plans beginning after completion of construction and a reasonable time for sales to have occurred.

Residential real estate first lien. Residential real estate first lien loans include all closed-end loans secured by first liens on 1-to-4 family residential properties. This category includes property containing 1-to-4 dwelling units (including vacation homes) or more than four dwelling units if each is separated from other units by dividing walls that extend from ground to roof. This category also includes individual condominium dwelling units and loans secured by an interest in individual cooperative housing units, even if in a building with five or more dwelling units.

Residential real estate all other. Residential real estate all other loans includes loans secured by junior (i.e., other than first) liens on 1-to-4 family residential properties. This category includes loans secured by junior liens even if the Company also holds a loan secured by a first lien on the same 1-to-4 family residential property.

Agricultural. This category includes loans secured by all land known to be used or usable for agricultural purposes, such as crop and livestock production.

Commercial non-real estate. Commercial non-real estate represents loans for working capital, facilities acquisition or expansion, purchase of equipment and other needs of commercial customers primarily located within Oklahoma. Loans in this category include commercial and industrial and state and political subdivisions.

Consumer non-real estate. Consumer loans are loans to individuals for household, family and other personal expenditures. Commonly, such loans are made to finance purchases of consumer goods, such as automobiles, boats, household goods, vacations and education.

Oil and gas. Oil and gas loans represent loans for producing oil and gas properties and any other mineral interests that may be pumped, mined, quarried or otherwise extracted from the earth. These loans also include upstream and midstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, wellsite preparation contractors and equipment manufacturers.

Other Real Estate Owned and Repossessed Assets and Loan Modifications

The following is a summary of other real estate owned and repossessed assets:


	December 31,
	2024		2023
	(Dollars in thousands)
Other real estate owned and repossessed assets	$	33,665	$	34,200

As of both December 31, 2024 and December 31, 2023, other real estate owned included a larger commercial real estate property recorded at approximately $28.1 million and $29.4 million, respectively. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in other noninterest expense on the consolidated statements of comprehensive income.

This property had the following rental income and operating expenses for the periods presented.


	For The Year Ended December 31,
	2024		2023		2022
	(Dollars in thousands)
Rental income	$	12,148	$	11,224	$	10,340
Operating expense		10,078		10,868		9,863

During 2024, the Company sold property held in other real estate owned for a total gain of $1.5 million compared to total gains of $728,000 in 2023 and $4.2 million in 2022.

During 2024, the Company wrote down property held in other real estate owned for a total of $4.0 million compared to write downs of $5.2 million in 2023 and $3.7 million in 2022.

The Company charges interest on principal balances outstanding on modified loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the year ended December 31, 2024 was approximately $14.8 million compared to $5.3 million during the year ended December 31, 2023.

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for any of the years ended December 31, 2024, 2023 or 2022. In addition, loans identified as nonaccrual loans have related allowances for credit losses at December 31, 2024 and December 31, 2023, respectively. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $3.5 million in 2024, $1.6 million in 2023 and $1.3 million in 2022.

Nonaccrual loans guaranteed by government agencies totaled $9.0 million at December 31, 2024 and $6.7 million at December 31, 2023.

The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.


	December 31, 2024		December 31, 2023
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	7,957	$	1,686
Commercial real estate non-owner occupied		8,913		874
Construction and development < 60 months		20,445		800
Construction residential real estate < 60 months		1,481		638
Residential real estate first lien		5,193		3,336
Residential real estate all other		653		899
Agriculture		2,047		3,662
Commercial non-real estate		8,552		10,101
Consumer non-real estate		1,028		449
Oil and gas		1,715		2,128
Total	$	57,984	$	24,573

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 the Company's 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)
December 31, 2024
Real estate:
Commercial real estate owner occupied	$	2,810	$	273	$	7,963	$	11,046	$	920,663	$	931,709	$	569
Commercial real estate non-owner occupied		603		16,871		610		18,084		1,560,399		1,578,483		41
Construction and development <60 months		317		351		20,327		20,995		735,667		756,662		116
Construction residential real estate < 60 months		292		622		616		1,530		248,843		250,373		—
Residential real estate first lien		9,128		2,118		3,332		14,578		1,416,687		1,431,265		797
Residential real estate all other		1,498		559		828		2,885		272,576		275,461		370
Agriculture		1,569		1,357		5,691		8,617		440,573		449,190		4,754
Commercial non-real estate		4,325		1,019		5,983		11,327		1,352,135		1,363,462		356
Consumer non-real estate		3,748		907		1,173		5,828		472,819		478,647		504
Oil and gas		1,111		458		232		1,801		508,057		509,858		232
Total	$	25,401	$	24,535	$	46,755	$	96,691	$	7,928,419	$	8,025,110	$	7,739

	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)
December 31, 2023
Real estate:
Commercial real estate owner occupied	$	1,386	$	26	$	5,598	$	7,010	$	953,934	$	960,944	$	4,377
Commercial real estate non-owner occupied		2,224		7,371		1,786		11,381		1,475,039		1,486,420		913
Construction and development <60 months		198		158		800		1,156		641,487		642,643		—
Construction residential real estate < 60 months		1,542		206		405		2,153		281,333		283,486		332
Residential real estate first lien		3,879		1,204		1,849		6,932		1,251,812		1,258,744		731
Residential real estate all other		757		190		613		1,560		243,136		244,696		549
Agriculture		1,694		724		1,227		3,645		423,494		427,139		579
Commercial non-real estate		1,501		436		10,028		11,965		1,277,487		1,289,452		1,714
Consumer non-real estate		3,248		1,090		594		4,932		471,535		476,467		347
Oil and gas		—		—		92		92		586,562		586,654		—
Total	$	16,429	$	11,405	$	22,992	$	50,826	$	7,605,819	$	7,656,645	$	9,542

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. Indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to identify 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 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 complexities or potential weaknesses could result in deterioration of the repayment prospects for the loan or the Company'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 complexity or deficiencies, loans lacking secondary sources of repayment where prudent, and loans with deficiencies in essential documentation, including financial information.

Grade 3 – Loans with Problem Potential - This category consists of performing loans which are considered to exhibit problem potential. 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 to an amount that is below market standards 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.

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. The government guaranteed portion of SBA loans is excluded.

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 Company’s revolving loans that are converted to term loans are not material and therefore have not been presented.

The following tables summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
December 31, 2024
Commercial real estate owner occupied
Grade 1	$	73,928	$	97,497	$	140,750	$	99,998	$	70,919	$	157,286	$	18,517	$	658,895
Grade 2		40,463		32,521		51,722		48,845		21,767		34,536		5,281		235,135
Grade 3		13,626		9,790		3,515		2,575		788		1,731		297		32,322
Grade 4		1,770		377		155		48		352		2,533		122		5,357
Total commercial real estate owner occupied		129,787		140,185		196,142		151,466		93,826		196,086		24,217		931,709
Commercial real estate non-owner occupied
Grade 1		116,295		285,971		260,605		176,082		107,312		93,834		32,071		1,072,170
Grade 2		75,546		106,628		144,117		53,575		28,429		63,393		5,982		477,670
Grade 3		5,133		—		12,643		—		72		240		—		18,088
Grade 4		5,904		129		—		1,971		—		2,551		—		10,555
Total commercial real estate non-owner occupied		202,878		392,728		417,365		231,628		135,813		160,018		38,053		1,578,483
Construction and development < 60 months
Grade 1		127,282		88,506		170,192		8,684		8,617		7,034		29,951		440,266
Grade 2		94,738		113,585		55,372		1,193		1,544		14,063		11,741		292,236
Grade 3		2,790		84		—		554		68		63		—		3,559
Grade 4		51		58		816		198		136		—		19,342		20,601
Total construction and development < 60 months		224,861		202,233		226,380		10,629		10,365		21,160		61,034		756,662
Construction residential real estate < 60 months
Grade 1		115,070		20,543		4,073		76		1,276		518		4,386		145,942
Grade 2		79,451		3,630		558		3		12		—		15,716		99,370
Grade 3		3,580		—		—		—		—		—		—		3,580
Grade 4		1,158		117		206		—		—		—		—		1,481
Total construction residential real estate <60 months		199,259		24,290		4,837		79		1,288		518		20,102		250,373
Residential real estate first lien
Grade 1		270,182		199,996		201,208		148,548		96,714		171,143		5,603		1,093,394
Grade 2		81,350		71,196		49,965		36,685		25,338		43,908		969		309,411
Grade 3		5,720		3,399		2,769		2,840		2,132		4,700		—		21,560
Grade 4		1,434		796		349		1,727		459		2,135		—		6,900
Total residential real estate first lien		358,686		275,387		254,291		189,800		124,643		221,886		6,572		1,431,265
Residential real estate all other
Grade 1		40,293		27,885		19,557		5,560		6,348		10,515		51,106		161,264
Grade 2		7,508		4,674		3,712		1,261		1,105		3,529		86,860		108,649
Grade 3		630		403		188		173		232		575		1,863		4,064
Grade 4		177		221		73		—		50		17		946		1,484
Total residential real estate all other		48,608		33,183		23,530		6,994		7,735		14,636		140,775		275,461
Agriculture
Grade 1		44,952		41,620		39,866		27,901		19,849		41,401		52,243		267,832
Grade 2		38,600		22,924		18,639		13,097		9,043		17,434		38,508		158,245
Grade 3		1,765		1,702		1,212		1,666		2,489		1,958		7,061		17,853
Grade 4		2,800		1,083		777		156		73		235		136		5,260
Total agriculture		88,117		67,329		60,494		42,820		31,454		61,028		97,948		449,190
Commercial non-real estate
Grade 1		154,831		105,332		138,536		114,365		23,278		47,272		318,308		901,922
Grade 2		103,737		76,999		29,152		17,882		4,005		6,016		175,832		413,623
Grade 3		1,487		2,121		1,944		438		128		299		36,288		42,705
Grade 4		1,432		1,305		976		348		386		165		358		4,970
Grade 5		—		—		71		6		1		164		—		242
Total commercial non-real estate		261,487		185,757		170,679		133,039		27,798		53,916		530,786		1,363,462
Consumer non-real estate
Grade 1		186,539		111,148		54,914		28,236		7,165		3,662		18,479		410,143
Grade 2		18,622		15,149		9,285		4,296		1,042		885		11,213		60,492
Grade 3		1,493		2,007		1,279		901		228		193		9		6,110
Grade 4		278		677		543		242		118		41		1		1,900
Grade 5		—		2		—		—		—		—		—		2
Total consumer non-real estate		206,932		128,983		66,021		33,675		8,553		4,781		29,702		478,647
Oil and gas
Grade 1		86,975		13,037		4,996		21,945		4,762		2,365		218,887		352,967
Grade 2		35,299		7,137		4,408		502		358		167		107,428		155,299
Grade 3		286		121		—		170		—		63		475		1,115
Grade 4		—		—		—		65		—		412		—		477
Total oil and gas		122,560		20,295		9,404		22,682		5,120		3,007		326,790		509,858
Total loans held for investment	$	1,843,175	$	1,470,370	$	1,429,143	$	822,812	$	446,595	$	737,036	$	1,275,979	$	8,025,110


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
December 31, 2023
Commercial real estate owner occupied
Grade 1	$	125,041	$	144,429	$	124,113	$	85,619	$	77,400	$	135,064	$	23,004	$	714,670
Grade 2		39,735		61,879		28,506		22,473		19,617		24,199		33,304		229,713
Grade 3		140		3,580		4,262		644		1,432		1,051		2,450		13,559
Grade 4		399		90		—		352		656		1,016		150		2,663
Grade 5		—		—		—		—		339		—		—		339
Total commercial real estate owner occupied		165,315		209,978		156,881		109,088		99,444		161,330		58,908		960,944
Commercial real estate non-owner occupied
Grade 1		221,014		271,637		172,291		113,676		56,831		68,576		44,878		948,903
Grade 2		82,206		139,982		79,204		53,154		63,331		72,075		28,844		518,796
Grade 3		2,135		6,666		1,715		—		6,207		251		—		16,974
Grade 4		200		632		349		—		—		566		—		1,747
Total commercial real estate non-owner occupied		305,555		418,917		253,559		166,830		126,369		141,468		73,722		1,486,420
Construction and development < 60 months
Grade 1		124,218		133,254		65,472		5,828		3,392		5,019		76,831		414,014
Grade 2		95,138		43,884		28,772		6,625		13,406		2,146		34,559		224,530
Grade 3		2,051		893		101		235		—		19		—		3,299
Grade 4		—		800		—		—		—		—		—		800
Total construction and development < 60 months		221,407		178,831		94,345		12,688		16,798		7,184		111,390		642,643
Construction residential real estate < 60 months
Grade 1		158,161		7,551		1,421		100		105		467		49,284		217,089
Grade 2		57,172		2,365		27		12		—		—		98		59,674
Grade 3		5,457		387		—		—		—		—		—		5,844
Grade 4		673		206		—		—		—		—		—		879
Total construction residential real estate <60 months		221,463		10,509		1,448		112		105		467		49,382		283,486
Residential real estate first lien
Grade 1		294,363		226,557		174,325		115,055		71,941		149,836		6,047		1,038,124
Grade 2		51,619		39,146		35,226		24,738		12,591		39,264		—		202,584
Grade 3		2,175		2,187		2,630		773		1,140		4,009		—		12,914
Grade 4		759		122		1,144		651		355		2,091		—		5,122
Total residential real estate first lien		348,916		268,012		213,325		141,217		86,027		195,200		6,047		1,258,744
Residential real estate all other
Grade 1		44,475		24,861		8,381		8,122		3,753		12,827		46,479		148,898
Grade 2		4,244		5,819		1,415		1,652		1,308		2,527		74,388		91,353
Grade 3		355		262		198		40		23		391		1,942		3,211
Grade 4		119		24		—		—		55		89		947		1,234
Total residential real estate all other		49,193		30,966		9,994		9,814		5,139		15,834		123,756		244,696
Agriculture
Grade 1		52,934		51,099		34,840		26,603		17,863		33,052		46,981		263,372
Grade 2		28,829		20,931		18,245		9,826		8,207		15,833		41,018		142,889
Grade 3		9,516		1,185		789		2,570		296		2,372		2,454		19,182
Grade 4		265		633		55		131		370		241		1		1,696
Total agriculture		91,544		73,848		53,929		39,130		26,736		51,498		90,454		427,139
Commercial non-real estate
Grade 1		252,112		176,013		159,470		39,097		36,907		33,824		277,740		975,163
Grade 2		95,590		35,955		19,519		6,591		6,456		8,071		127,800		299,982
Grade 3		2,206		2,598		1,011		109		121		164		1,779		7,988
Grade 4		1,181		1,691		400		686		309		154		1,425		5,846
Grade 5		—		—		—		—		473		—		—		473
Total commercial non-real estate		351,089		216,257		180,400		46,483		44,266		42,213		408,744		1,289,452
Consumer non-real estate
Grade 1		211,028		105,365		55,079		18,529		8,939		3,301		22,184		424,425
Grade 2		19,085		14,919		6,764		2,062		702		910		2,085		46,527
Grade 3		941		1,424		932		326		299		156		11		4,089
Grade 4		361		452		409		117		72		10		5		1,426
Total consumer non-real estate		231,415		122,160		63,184		21,034		10,012		4,377		24,285		476,467
Oil and gas
Grade 1		147,902		29,658		72,127		13,898		1,553		15,015		180,321		460,474
Grade 2		66,080		4,851		1,019		402		279		177		50,201		123,009
Grade 3		1,758		132		225		—		—		—		323		2,438
Grade 4		313		83		166		—		10		161		—		733
Total oil and gas		216,053		34,724		73,537		14,300		1,842		15,353		230,845		586,654
Total loans held for investment	$	2,201,950	$	1,564,202	$	1,100,602	$	560,696	$	416,738	$	634,924	$	1,177,533	$	7,656,645

The following tables summarize the Company’s gross charge-offs by year of origination for the periods indicated:


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Year ended December 31, 2024
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	15	$	—	$	—	$	—	$	15
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		12		189		1		1		33		—		236
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months
Current-period gross charge-offs		—		3		—		—		—		—		—		3
Residential real estate first lien
Current-period gross charge-offs		3		47		61		6		4		134		—		255
Residential real estate all other
Current-period gross charge-offs		20		—		84		—		—		7		60		171
Agriculture
Current-period gross charge-offs		—		40		47		13		—		66		—		166
Commercial non-real estate
Current-period gross charge-offs		94		1,323		462		191		96		324		2,004		4,494
Consumer non-real estate
Current-period gross charge-offs		348		864		427		141		44		59		31		1,914
Oil and gas
Current-period gross charge-offs		—		9		83		—		—		—		—		92
Total current-period gross charge-offs	$	465	$	2,298	$	1,353	$	367	$	145	$	623	$	2,095	$	7,346


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Year ended December 31, 2023
Commercial real estate owner occupied
Current-period gross charge-offs	$	174	$	196	$	26	$	203	$	165	$	158	$	—	$	922
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		—		—		3		—		3
Construction and development < 60 months
Current-period gross charge-offs		—		3		—		2		—		1		—		6
Construction residential real estate < 60 months
Current-period gross charge-offs		—		94		—		—		—		—		—		94
Residential real estate first lien
Current-period gross charge-offs		—		—		91		44		5		25		—		165
Residential real estate all other
Current-period gross charge-offs		—		4		19		—		1		36		—		60
Agriculture
Current-period gross charge-offs		—		154		9		317		14		2		—		496
Commercial non-real estate
Current-period gross charge-offs		390		351		111		22		51		160		—		1,085
Consumer non-real estate
Current-period gross charge-offs		312		632		261		45		41		40		19		1,350
Oil and gas
Current-period gross charge-offs		57		2		—		—		—		—		—		59
Total current-period gross charge-offs	$	933	$	1,436	$	517	$	633	$	277	$	425	$	19	$	4,240

Allowance for Credit Losses Methodology

The Company determines its provision for credit losses and allowance for credit losses using the current expected credit loss methodology that is referred to as the current expected credit loss ("CECL") model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.

The Company elected to utilize a methodology known as vintage loss analysis for BancFirst, Pegasus, and Worthington. Vintage loss analysis measures impairment based on the age of the accounts and the historical asset performance of assets with similar risk characteristics. Vintage loss analysis determines expected losses by allowing the Company to calculate the cumulative loss rates of a given loan pool and, in so doing, determine the loan pool’s lifetime expected loss experience relative to the appropriate type of financial assets that share similar risk characteristics. Vintage loss analysis uses different “vintages” analyzed by year of origination through the weighted average maturity of each loan pool. The key quantitative inputs used in the Company’s estimate of the allowance for credit losses include 1) all available loan data tracked by year of origination, 2) total charge-offs for each specific loan pool recorded since year of origination, 3) recovery rate calculated by the average recovery over the previous seven years across all loan pools, and 4) a weighting factor biased to more recent loss experience. The quantitative expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, as it references the specific vintage’s initial balance. The loss experience of this original balance is tracked annually and summed over the life of the loan for each separate loan pool, leaving a cumulative life of credit loss rate based on historic averages weighted towards more recent loss experience. These key quantitative inputs change from period to period as new loans are originated, and charge-offs and recoveries are recognized. The recovery rate is revised on an annual basis, taking into consideration the most recent seven years. The weighting factor percentages remain static; however, the most recent year receives the highest weighting percentage.

The Senior Loan Committee (“the SLC”) sets qualitative adjustments for each loan pool. In setting the qualitative adjustments, they consider several factors, including external economic information, peer bank comparisons and experience with the loan portfolio, among others. The SLC also considers other current conditions adjustments and reasonable and supportable forecasts derived from third party information, primarily Moody’s Analytics economic scenarios. To determine the appropriateness of the economic scenarios, the Company uses judgment and statistical analysis which correlates charge-off history to the economic scenarios. The Company then forecasts future loss expectations based on the selected economic scenarios over the next 12-24 months, which is driven by management’s judgment of a reasonable and supportable forecast period, to arrive at an estimated qualitative adjustment attributable to economic forecasts. For periods beyond which the Company is able to make or obtain reasonable and supportable forecasts of expected credit losses, the Company reverts to historical loss information.

In some cases, management may determine a loan to be collateral dependent. A loan is considered collateral-dependent when the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date. For collateral dependent loans, the standard allows institutions to use, as a practical expedient, the fair value of the collateral to measure expected credit losses on collateral-dependent financial assets. This amount is included in the allowance for credit losses.

The increase in allowance for credit losses during 2024 was primarily related to loan growth during the year.

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		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Year ended December 31, 2024
Real estate:
Commercial real estate owner occupied	$	7,483	$	(15	)	$	85	$	70		$	(684	)	$	6,869
Commercial real estate non-owner occupied		33,080		(236	)		94		(142	)		159			33,097
Construction and development < 60 months		3,950		—			—		—			4,721			8,671
Construction residential real estate < 60 months		3,414		(3	)		—		(3	)		(1,075	)		2,336
Residential real estate first lien		4,914		(255	)		26		(229	)		(117	)		4,568
Residential real estate all other		1,646		(171	)		12		(159	)		254			1,741
Agriculture		6,137		(166	)		43		(123	)		(318	)		5,696
Commercial non-real estate		22,745		(4,494	)		542		(3,952	)		5,357			24,150
Consumer non-real estate		4,401		(1,914	)		237		(1,677	)		2,109			4,833
Oil and gas		9,030		(92	)		—		(92	)		(1,402	)		7,536
Total	$	96,800	$	(7,346	)	$	1,039	$	(6,307	)	$	9,004		$	99,497


	Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for/(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Year ended December 31, 2023
Real estate:
Commercial real estate owner occupied	$	6,416	$	(922	)	$	68	$	(854	)	$	1,921		$	7,483
Commercial real estate non-owner occupied		30,190		(3	)		—		(3	)		2,893			33,080
Construction and development < 60 months		3,778		(6	)		11		5			167			3,950
Construction residential real estate < 60 months		3,275		(94	)		—		(94	)		233			3,414
Residential real estate first lien		4,092		(165	)		15		(150	)		972			4,914
Residential real estate all other		1,418		(60	)		5		(55	)		283			1,646
Agriculture		6,217		(496	)		127		(369	)		289			6,137
Commercial non-real estate		25,106		(1,085	)		446		(639	)		(1,722	)		22,745
Consumer non-real estate		4,132		(1,350	)		182		(1,168	)		1,437			4,401
Oil and gas		8,104		(59	)		—		(59	)		985			9,030
Total	$	92,728	$	(4,240	)	$	854	$	(3,386	)	$	7,458		$	96,800

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 Company did not purchase credit-deteriorated loans during the years ended December 31, 2024 or December 31, 2023.

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. During the years ended December 31, 2024 and 2023, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:


	Collateral Type
	Real Estate		Business Assets		Other Assets		Total		Specific Allocation
As of December 31, 2024	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied		7,890		—		—		7,890		879
Construction and development < 60 months		20,142		—		—		20,142		3,755
Construction residential real estate < 60 months		206		—		—		206		75
Residential real estate first lien		300		—		—		300		93
Residential real estate all other		100		—		—		100		34
Agriculture		1,584		110		13		1,707		688
Commercial non-real estate		—		10,087		108		10,195		2,222
Consumer non-real estate		—		—		399		399		242
Oil and gas		—		—		—		—		—
Total collateral-dependent loans held for investment	$	30,222	$	10,197	$	520	$	40,939	$	7,988

	Collateral Type
	Real Estate		Business Assets		Other Assets		Total		Specific Allocation
As of December 31, 2023	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied		632		—		—		632		250
Construction and development < 60 months		800		—		—		800		225
Construction residential real estate < 60 months		638		—		—		638		134
Residential real estate first lien		189		—		—		189		62
Residential real estate all other		140		—		—		140		140
Agriculture		1,841		593		15		2,449		1,386
Commercial non-real estate		—		6,090		241		6,331		1,867
Consumer non-real estate		—		—		147		147		88
Oil and gas		—		—		—		—		—
Total collateral-dependent loans held for investment	$	4,240	$	6,683	$	403	$	11,326	$	4,152

Non-Cash Transfers from Loans and Premises and Equipment

Transfers from loans and premises and equipment to other real estate owned, repossessed assets, and other assets are non-cash transactions, and are not included in the consolidated statements of cash flow.

Transfers from loans and premises and equipment to other real estate owned, repossessed assets, and other assets during the periods presented are summarized as follows:


	Year ended December 31,
	2024		2023		2022
	(Dollars in thousands)
Other real estate owned	$	10,172	$	3,459	$	2,563
Repossessed assets		2,908		2,019		1,040
Other assets		—		—		1,943
Total	$	13,080	$	5,478	$	5,546

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 collectability 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)
2024	$	84,264	$	79,623	$	(38,077	)	$	125,810
2023		23,167		106,819		(45,722	)		84,264
2022		28,292		46,124		(51,249	)		23,167