Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (sec. 232-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of July 31, ~~2022~~2023 there were ~~32,787,596~~32,941,756 shares of the registrant’s Common Stock outstanding.


	June 30,			December 31,			June 30,			December 31,
	2022			2021			2023			2022
	(unaudited)			(see Note 1)			(unaudited)			(see Note 1)
ASSETS
Cash and due from banks	$	289,030		$	228,819		$	221,138		$	259,049
Interest-bearing deposits with banks		3,590,311			1,821,203			2,188,004			2,909,861
Federal funds sold		1,525			800			4,481			2,850
Debt securities held for investment (fair value: $2,392 and $2,978, respectively)		2,391			2,977
Debt securities held for investment (fair value: $1,193 and $2,383, respectively)								1,193			2,383
Debt securities available for sale at fair value		1,203,503			531,523			1,569,427			1,538,221
Loans held for sale		7,360			24,776			8,783			6,232
Loans held for investment (net of unearned interest)		6,613,283			6,169,442			7,298,692			6,943,563
Allowance for credit losses		(86,935	)		(83,936	)		(96,920	)		(92,728	)
Loans, net of allowance for credit losses		6,526,348			6,085,506			7,201,772			6,850,835
Premises and equipment, net		279,609			269,047			279,758			278,088
Other real estate owned		39,097			39,475			41,270			36,756
Intangible assets, net		21,743			17,566			18,223			19,983
Goodwill		183,639			149,922			182,055			182,055
Accrued interest receivable and other assets		385,517			233,998			304,161			301,550
Total assets	$	12,530,073		$	9,405,612		$	12,020,265		$	12,387,863

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	5,228,774		$	3,775,387		$	4,285,620		$	4,944,730
Interest-bearing		5,913,914			4,316,527			6,189,560			6,029,498
Total deposits		11,142,688			8,091,914			10,475,180			10,974,228
Short-term borrowings		6,100			0			3,893			300
Accrued interest payable and other liabilities		109,575			55,977			114,329			76,455
Subordinated debt		86,015			85,987			86,072			86,044
Total liabilities		11,344,378			8,233,878			10,679,474			11,137,027

Stockholders' equity:
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; NaN issued		—			—
Cumulative preferred stock, $5.00 par; 900,000 shares authorized; NaN issued		—			—
Common stock, $1.00 par, 40,000,000 shares authorized; shares issued and outstanding: 32,781,198 and 32,603,118, respectively		32,781			32,603
Senior preferred stock, $1.00 par; 10,000,000 shares authorized; none issued								—			—
Cumulative preferred stock, $5.00 par; 900,000 shares authorized; none issued								—			—
Common stock, $1.00 par, 40,000,000 shares authorized; shares issued and outstanding: 32,939,256 and 32,875,560, respectively								32,939			32,876
Capital surplus		165,295			159,914			172,358			169,231
Retained earnings		1,034,107			977,067			1,206,499			1,120,292
Accumulated other comprehensive (loss) income, net of tax of $14,406 and $(684), respectively		(46,488	)		2,150
Accumulated other comprehensive loss, net of tax benefit of $21,953 and $22,107, respectively								(71,005	)		(71,563	)
Total stockholders' equity		1,185,695			1,171,734			1,340,791			1,250,836
Total liabilities and stockholders' equity	$	12,530,073		$	9,405,612		$	12,020,265		$	12,387,863

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


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
INTEREST INCOME
Loans, including fees	$	78,726		$	82,447		$	151,680		$	160,109		$	114,612		$	78,726		$	219,008		$	151,680
Debt securities:
Taxable		5,142			1,602			8,923			3,295			9,408			5,142			18,399			8,923
Tax-exempt		23			70			49			140			23			23			30			49
Federal funds sold		5			—			6			0			81			5			113			6
Interest-bearing deposits with banks		7,600			825			9,357			1,420			26,694			7,600			58,714			9,357
Total interest income		91,496			84,944			170,015			164,964			150,818			91,496			296,264			170,015
INTEREST EXPENSE
Deposits		3,586			2,003			5,567			4,325			43,732			3,586			78,909			5,567
Short-term borrowings		12			0			13			1			129			12			212			13
Subordinated debt		1,031			578			2,061			1,069			1,031			1,031			2,061			2,061
Total interest expense		4,629			2,581			7,641			5,395			44,892			4,629			81,182			7,641
Net interest income		86,867			82,363			162,374			159,569			105,926			86,867			215,082			162,374
Provision for (benefit from) credit losses		501			(9,949	)		3,437			(9,949	)
Net interest income after provision for (benefit from) credit losses		86,366			92,312			158,937			169,518
Provision for credit losses														2,824			501			5,146			3,437
Net interest income after provision for credit losses														103,102			86,366			209,936			158,937
NONINTEREST INCOME
Trust revenue		3,949			3,264			7,455			6,366			4,590			3,949			8,812			7,455
Service charges on deposits		21,618			20,524			42,993			39,624			22,268			21,618			43,499			42,993
Securities transactions (includes accumulated other comprehensive loss reclassifications of $0, $0, $1,536 and $0, respectively)		—			172			(3,915	)		267
Securities transactions (includes accumulated other comprehensive loss reclassifications of $0, $0, $0 and $1,536, respectively)														110			—			(103	)		(3,915	)
Income from sales of loans		1,256			2,133			2,922			4,143			757			1,256			1,361			2,922
Insurance commissions		5,302			5,015			12,729			11,004			6,225			5,302			14,966			12,729
Cash management		4,447			3,068			7,578			6,071			7,927			4,447			14,661			7,578
Gain on sale of other assets		118			73			163			2,712			315			118			794			163
Other		5,908			10,369			16,323			14,366			5,782			5,908			11,812			16,323
Total noninterest income		42,598			44,618			86,248			84,553			47,974			42,598			95,802			86,248
NONINTEREST EXPENSE
Salaries and employee benefits		45,284			41,992			89,216			81,569			49,803			45,284			99,055			89,216
Occupancy, net		4,734			4,528			9,137			8,876			5,118			4,734			10,101			9,137
Depreciation		4,647			4,133			9,422			8,010			4,769			4,647			9,412			9,422
Amortization of intangible assets		857			809			1,688			1,602			880			857			1,760			1,688
Data processing services		1,975			1,660			3,780			3,338			2,217			1,975			4,324			3,780
Net (income) expense from other real estate owned		(510	)		3,357			1,284			4,867
Net expense from other real estate owned														2,889			(510	)		5,348			1,284
Marketing and business promotion		1,591			1,648			3,664			3,527			1,900			1,591			4,427			3,664
Deposit insurance		1,196			766			2,324			1,642			1,463			1,196			3,076			2,324
Other		13,943			15,130			25,714			25,555			12,071			13,943			23,924			25,714
Total noninterest expense		73,717			74,023			146,229			138,986			81,110			73,717			161,427			146,229
Income before taxes		55,247			62,907			98,956			115,085			69,966			55,247			144,311			98,956
Income tax expense		10,540			14,715			18,334			24,373			14,956			10,540			31,768			18,334
Net income	$	44,707		$	48,192		$	80,622		$	90,712		$	55,010		$	44,707		$	112,543		$	80,622
NET INCOME PER COMMON SHARE
Basic	$	1.36		$	1.47		$	2.46		$	2.77		$	1.67		$	1.36		$	3.42		$	2.46
Diluted	$	1.34		$	1.45		$	2.42		$	2.72		$	1.64		$	1.34		$	3.36		$	2.42
OTHER COMPREHENSIVE (LOSS) GAIN
Unrealized losses on debt securities, net of tax of $5,240, $472, $15,459 and $808, respectively		(16,972	)		(1,007	)		(49,805	)		(2,013	)
Reclassification adjustment for losses included in net income, net of tax of $0, $0, $(369) and $0, respectively		—			—			1,167			—
Other comprehensive loss, net of tax of $5,240, $472, $15,090 and $808, respectively		(16,972	)		(1,007	)		(48,638	)		(2,013	)
OTHER COMPREHENSIVE (LOSS)/GAIN																					��
Unrealized (loss)/income on debt securities, net of tax benefit/(expense) of $4,350, $5,240, $(154) and $15,459, respectively														(14,091	)		(16,972	)		558			(49,805	)
Reclassification adjustment for loss included in net income, net of tax expense of $0, $0, $0 and $369, respectively														—			—			—			1,167
Other comprehensive (loss)/income, net of tax benefit/(expense) of $4,350, $5,240, $(154) and $15,090, respectively														(14,091	)		(16,972	)		558			(48,638	)
Comprehensive income	$	27,735		$	47,185		$	31,984		$	88,699		$	40,919		$	27,735		$	113,101		$	31,984

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


	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
COMMON STOCK
Issued at beginning of period	$	32,726		$	32,771		$	32,603		$	32,720		$	32,900		$	32,726		$	32,876		$	32,603
Shares issued for stock options		55			14			178			65			39			55			63			178
Issued at end of period	$	32,781		$	32,785		$	32,781		$	32,785		$	32,939		$	32,781		$	32,939		$	32,781
CAPITAL SURPLUS
Balance at beginning of period	$	163,392		$	157,450		$	159,914		$	156,574		$	170,231		$	163,392		$	169,231		$	159,914
Common stock issued for stock options		1,443			399			4,463			1,657			1,296			1,443			1,914			4,463
Net cash settlement of options		—			—			—			(958	)
Stock-based compensation arrangements		460			473			918			1,049			831			460			1,213			918
Balance at end of period	$	165,295		$	158,322		$	165,295		$	158,322		$	172,358		$	165,295		$	172,358		$	165,295
RETAINED EARNINGS
Balance at beginning of period	$	1,001,200		$	898,026		$	977,067		$	871,161		$	1,164,665		$	1,001,200		$	1,120,292		$	977,067
Net income		44,707			48,192			80,622			90,712			55,010			44,707			112,543			80,622
Dividends on common stock ($0.36, $0.34, $0.72 and $0.68 per share, respectively)		(11,800	)		(11,151	)		(23,582	)		(22,285	)
Net cash settlement of options		—			—			—			(4,521	)
Dividends on common stock ($0.40, $0.36, $0.80 and $0.72 per share, respectively)														(13,176	)		(11,800	)		(26,336	)		(23,582	)
Balance at end of period	$	1,034,107		$	935,067		$	1,034,107		$	935,067		$	1,206,499		$	1,034,107		$	1,206,499		$	1,034,107
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized (losses)/gains on securities:
Balance at beginning of period	$	(29,516	)	$	6,424		$	2,150		$	7,430		$	(56,914	)	$	(29,516	)	$	(71,563	)	$	2,150
Net change		(16,972	)		(1,007	)		(48,638	)		(2,013	)		(14,091	)		(16,972	)		558			(48,638	)
Balance at end of period	$	(46,488	)	$	5,417		$	(46,488	)	$	5,417		$	(71,005	)	$	(46,488	)	$	(71,005	)	$	(46,488	)
Total stockholders’ equity	$	1,185,695		$	1,131,591		$	1,185,695		$	1,131,591		$	1,340,791		$	1,185,695		$	1,340,791		$	1,185,695

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


	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	80,622		$	90,712		$	112,543		$	80,622
Adjustments to reconcile to net cash provided by operating activities:
Provision for (benefit from) credit losses		3,437			(9,949	)
Provision for credit losses								5,146			3,437
Depreciation and amortization		11,110			9,612			11,172			11,110
Net amortization of securities premiums and discounts		2,773			1,670			(577	)		2,773
Realized securities losses/(gains)		3,915			(267	)
Realized securities losses								103			3,915
Gain on sales of loans		(2,922	)		(4,143	)		(1,361	)		(2,922	)
Cash receipts from the sale of loans originated for sale		155,075			221,051			77,758			155,075
Cash disbursements for loans originated for sale		(134,737	)		(200,820	)		(78,948	)		(134,737	)
Deferred income tax benefit		(1,806	)		(1,495	)		(1,489	)		(1,806	)
Gain on sale of other assets		(3,996	)		(2,606	)		(1,061	)		(3,996	)
(Decrease)/increase in interest receivable		(5,065	)		2,048
Increase/(decrease) in interest payable		160			(330	)
Increase in interest receivable								(3,387	)		(5,065	)
Increase in interest payable								3,005			160
Amortization of stock-based compensation arrangements		918			1,049			1,213			918
Excess tax benefit from stock-based compensation arrangements		(1,771	)		(1,693	)		(734	)		(1,771	)
Other, net		12,127			32,989			5,797			12,127
Net cash provided by operating activities		119,840			137,828			129,180			119,840
INVESTING ACTIVITIES
Net cash received from acquisitions, net of cash paid		121,099			12,412			—			121,099
Net cash paid from sale of assets and liabilities, net of cash received		—			(13,733	)
Net increase in federal funds sold		1,888			15,000
Purchases of held for investment debt securities		—			(845	)
Net (increase)/decrease in federal funds sold								(1,631	)		1,888
Purchases of available for sale debt securities		(1,009,340	)		(251,673	)		(94,112	)		(1,009,340	)
Proceeds from maturities, calls and paydowns of held for investment debt securities		66			820			1,349			66
Proceeds from maturities, calls and paydowns of available for sale debt securities		44,915			273,872			64,036			44,915
Proceeds from sales of available for sale securities		222,473			0			—			222,473
Purchase of equity securities		(208	)		(470	)		(294	)		(208	)
Proceeds from paydowns and sales of equity securities		699			392			531			699
Net change in loans		(190,135	)		388,357			(357,140	)		(190,135	)
Net payments on derivative asset contracts		(84,932	)		(3,661	)
Net receipts/(payments) on derivative asset contracts								11,628			(84,932	)
Purchases of premises, equipment and computer software		(11,869	)		(15,200	)		(13,016	)		(11,869	)
Purchase of tax credits		(3,676	)		(2,048	)		(3,813	)		(3,676	)
Other, net		10,519			3,567			23,302			10,519
Net cash (used in) provided by investing activities		(898,501	)		406,790
Net cash used in investing activities								(369,160	)		(898,501	)
FINANCING ACTIVITIES
Net change in deposits		2,620,757			1,444,742			(499,048	)		2,620,757
Net change in short-term borrowings		6,100			2,000			3,593			6,100
Proceeds from issuance of subordinated notes, net of debt issuance costs		—			59,150
Issuance of common stock in connection with stock options, net		4,641			1,722			1,977			4,641
Net cash settlement of options		—			(5,479	)
Cash dividends paid		(23,518	)		(22,267	)		(26,310	)		(23,518	)
Net cash provided by financing activities		2,607,980			1,479,868
Net increase in cash, due from banks and interest-bearing deposits		1,829,319			2,024,486
Net cash (used in) provided by financing activities								(519,788	)		2,607,980
Net (decrease)/increase in cash, due from banks and interest-bearing deposits								(759,768	)		1,829,319
Cash, due from banks and interest-bearing deposits at the beginning of the period		2,050,022			1,616,912			3,168,910			2,050,022
Cash, due from banks and interest-bearing deposits at the end of the period	$	3,879,341		$	3,641,398		$	2,409,142		$	3,879,341
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	7,456		$	5,736		$	78,176		$	7,456
Cash paid during the period for income taxes	$	14,080		$	15,400		$	31,180		$	14,080
Noncash investing and financing activities:
Cash consideration for acquisitions	$	77,685		$	21,000		$	—		$	77,685
Fair value of assets acquired in acquisitions	$	511,466		$	284,224		$	—		$	511,466
Liabilities assumed in acquisitions	$	433,782		$	256,412		$	—		$	433,782
Unpaid common stock dividends declared	$	11,801		$	11,143		$	13,176		$	11,801

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

(1) DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies of BancFirst Corporation and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United States of America (U.S. GAAP) and general practice within the banking industry. A summary of significant accounting policies can be found in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., Pegasus Bank ("Pegasus"), Worthington ~~National~~ Bank ("Worthington") and BancFirst and its ~~subsidiaries.~~subsidiaries ("BancFirst"). The principal operating subsidiaries of BancFirst are ~~Council Oak Investment Corporation, Council Oak Real Estate, Inc.,~~ BFTower, LLC, BFC-PNC LLC, and BancFirst Agency, Inc. All significant intercompany accounts and transactions have been eliminated. Assets held in a fiduciary or agency capacity are not assets of the Company and, accordingly, are not included in the unaudited interim consolidated financial statements.

The accompanying unaudited interim consolidated financial statements and notes are presented in accordance with U.S. GAAP for interim financial information and the instructions for Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). The information contained in the consolidated financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, should be referred to in connection with these unaudited interim consolidated financial statements. Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

The unaudited interim consolidated financial statements contained herein reflect all adjustments, which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations of the Company for the interim periods presented. All such adjustments are of a normal and recurring nature.

Reclassifications

Certain ~~items in prior consolidated financial statements~~loan segments from 2022 have been reclassified to conform to the ~~current~~2023 presentation. Such reclassifications had no effect on previously reported balance sheets, cash flows, stockholders’ equity or comprehensive income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States inherently involves the use of estimates and assumptions that affect the amounts reported in the financial statements and the related disclosures. These estimates relate principally to the determination of the allowance for credit losses, income taxes, the fair value of financial instruments and the valuation of ~~intangibles.~~assets and liabilities acquired in a business combination, including identifiable intangible assets. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

Recent Accounting Pronouncements

Standards ~~Not Yet Adopted:~~Adopted During the Current Period:

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, “Financial Instruments – Credit Losses (Topic 326).: Troubled Debt Restructurings and Vintage Disclosures.” ASU 2022-02 ~~eliminates~~eliminated the ~~TDR~~Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, ~~requires~~required that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing ~~loan. The Company has the option to apply~~loan when a ~~modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings when adopted.~~borrower is experiencing financial difficulty. In addition, the update ~~requires~~required that the Company disclose current-period ~~write-offs~~charge-offs by year of origination for financing receivables. The current-period ~~write-off~~charge-off amendment ~~should be~~was applied prospectively. The amendments ~~are~~were effective for annual periods beginning after December 15, 2022, including interim periods within those annual periods. The Company adopted ASU 2022-02 on January 1, 2023. ASU No. 2022-02 did not have a significant impact on the Company’s consolidated financial statements.

In March 2023, the FASB issued ASU No. 2023-02, "Investments - Equity Method and Joint Ventures (Topic 323)." ASU 2023-02 permits the election of accounting for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method, if certain conditions are met. Using the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income

tax expense (benefit). The amendments are effective for annual periods beginning after December 15, 2023, including interim periods within those annual periods. Early adoption is ~~permitted; however~~permitted for all entities in any interim period. The Company adopted the amendment as of January 1, 2023 using the modified retrospective transition. The Company has investments in New Markets Tax Credits ("NMTC") and Low-Income Housing Tax Credits ("LIHTC") that will be affected by ASU 2023-02. Upon adoption of ASU No. 2023-02, the Company ~~expects~~recorded $21.8 million in other assets and other liabilities on the consolidated balance sheet for unfunded LIHTC commitments and amortized $977,000 of NMTC investments to ~~adopt ASU 2022-02 on January 1, 2023.~~income tax expense during the period that would have previously been recorded to other expense. ASU No. ~~2022-02 is not expected to~~2023-02 did not have a significant impact on the Company’s consolidated financial statements.

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

On July 28, 2023, the Company's wholly-owned subsidiary BancFirst applied to become a Federal Reserve System member bank, which would change its primary regulator from the Federal Deposit Insurance Corporation (“FDIC”) to the Federal Reserve System. The Company expects its other wholly-owned subsidiaries Pegasus and Worthington will also apply for Federal Reserve System membership. The BancFirst application is pending approval from the Federal Reserve System.

On February 8, 2022, ~~BancFirst Corporation~~the Company acquired Worthington for an aggregate cash purchase price of $77.7 million. Worthington is chartered and regulated by the ~~Office of the Comptroller of the Currency (OCC)~~Texas State Banking Department with 1one banking location in Arlington, Texas, 1one in Colleyville, Texas and 2two in Fort Worth, Texas. At acquisition, Worthington had approximately $478 million in total assets, $257 million in loans and $430 million in deposits. Worthington will continue to operate under a separate charter and remain a separate subsidiary of ~~BancFirst Corporation~~the Company governed by its existing board of directors. ~~BancFirst Corporation~~The Company intends to provide an appropriate amount of capital or other support to increase Worthington’s ability to approve larger loans and allow Worthington to continue to grow earning assets. As a result of the acquisition, the Company recorded a core deposit intangible of ~~approximately~~ $5.9 million and goodwill of ~~approximately~~ $~~33.7~~32.1 million. ~~These fair value estimates are considered preliminary and are subject to change for up to one year after the closing date~~The Company did not incur a material amount of ~~the acquisition as additional information becomes available.~~acquisition-related expenses. The effect of this acquisition was included in the consolidated financial statements of the Company from the date of acquisition forward. Pro forma information has not been presented because the acquisition did not have a material effect on the Company’s consolidated financial statements. The acquisition of Worthington complements the Company by expanding ~~it's~~its Texas presence in the Dallas-Fort Worth market.

~~On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $~~60 ~~million aggregate principal amount of~~ ~~3.50% Fixed-to-Floating Rate Subordinated Notes due~~ ~~2036~~ (the “Subordinated Notes”) to various institutional accredited investors. See Note (7) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.

~~On May 20, 2021, the Company purchased approximately $284~~ ~~million in total assets, which included approximately $195~~ ~~million in loans, and assumed approximately $256~~ ~~million in deposits and certain other obligations, from The First National Bank and Trust Company of Vinita, Oklahoma for a purchase price of approximately $~~21 ~~million. The Company recorded a bargain purchase gain related to this purchase of approximately $4.8~~ million, which was included in other noninterest income on the consolidated statement of comprehensive income and in other operating activities on the consolidated statement of cash flow. The bargain purchase gain is a noncash item on the consolidated statement of cash flow. In addition, the Company recorded expenses related to this purchase of approximately $~~4.8~~ ~~million, which were included in noninterest expense. As a result of the purchase, the Company recorded a core deposit intangible of approximately $1.7~~ million. The effect of this purchase was included in the consolidated financial statement of the Company from the date of purchase forward. The purchase did not have a material effect on the Company’s consolidated financial statements. The First National Bank and Trust Company of Vinita was a nationally chartered bank with 2 ~~banking locations in Vinita and Grove, Oklahoma.~~

~~On January 22, 2021, the Company sold approximately $~~21 ~~million in loans and approximately $~~38 ~~million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma. The Company recorded a gain on the transaction of $2.5~~ ~~million, which is included in noninterest income in the first quarter of 2021.~~

(3) SECURITIES

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



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2022	(Dollars in thousands)
June 30, 2023									(Dollars in thousands)
Mortgage backed securities (1)	$	21	$	1	$	—	$	22	$	8	$	—	$	—	$	8
States and political subdivisions		1,870		—		—		1,870		685		—		—		685
Other securities		500		—		—		500		500		—		—		500
Total	$	2,391	$	1	$	—	$	2,392	$	1,193	$	—	$	—	$	1,193
December 31, 2021
December 31, 2022
Mortgage backed securities (1)	$	32	$	1	$	—	$	33	$	13	$	—	$	—	$	13
States and political subdivisions		2,445		—		—		2,445		1,870		—		—		1,870
Other securities		500		—		—		500		500		—		—		500
Total	$	2,977	$	1	$	—	$	2,978	$	2,383	$	—	$	—	$	2,383

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



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
June 30, 2022	(Dollars in thousands)
June 30, 2023										(Dollars in thousands)
U.S. treasuries	$	1,205,842	$	3	$	(58,987	)	$	1,146,858	$	1,599,593	$	—	$	(89,527	)	$	1,510,066
U.S. federal agencies		18,509		363		(1	)		18,871		13,368		170		(2	)		13,536
Mortgage backed securities (1)		18,689		29		(1,429	)		17,289		17,479		10		(1,869	)		15,620
States and political subdivisions		4,994		61		(179	)		4,876		10,998		21		(133	)		10,886
Asset backed securities		13,363		—		(486	)		12,877		12,784		—		(349	)		12,435
Other securities		3,000		—		(268	)		2,732		8,163		—		(1,279	)		6,884
Total	$	1,264,397	$	456	$	(61,350	)	$	1,203,503	$	1,662,385	$	201	$	(93,159	)	$	1,569,427
December 31, 2021
December 31, 2022
U.S. treasuries	$	455,701	$	3,693	$	(1,766	)	$	457,628	$	1,568,563	$	—	$	(90,699	)	$	1,477,864
U.S. federal agencies		21,609		335		(2	)		21,942		15,025		198		(1	)		15,222
Mortgage backed securities (1)		28,897		400		(14	)		29,283		18,449		21		(1,884	)		16,586
States and political subdivisions		6,128		194		(3	)		6,319		8,320		35		(221	)		8,134
Asset backed securities		13,354		3		—			13,357		13,371		—		(361	)		13,010
Other securities		3,000		—		(6	)		2,994		8,163		—		(758	)		7,405
Total	$	528,689	$	4,625	$	(1,791	)	$	531,523	$	1,631,891	$	254	$	(93,924	)	$	1,538,221

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

On January 10, 2022, the Company purchased United States Treasury Notes of $600 million par value with an average yield of 1.42% and an average maturity of 53 months.

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


	June 30, 2022				December 31, 2021				June 30, 2023				December 31, 2022
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in thousands)								(Dollars in thousands)
Held for Investment
Contractual maturity of debt securities:
Within one year	$	1,186	$	1,186	$	577	$	577	$	350	$	350	$	1,186	$	1,186
After one year but within five years		1,201		1,202		2,396		2,397		842		842		1,195		1,195
After five years but within ten years		4		4		4		4		1		1		2		2
After ten years		—		—		—		—		—		—		—		—
Total	$	2,391	$	2,392	$	2,977	$	2,978	$	1,193	$	1,193	$	2,383	$	2,383
Available for Sale
Contractual maturity of debt securities:
Within one year	$	61,131	$	61,108	$	58,478	$	58,688	$	150,837	$	147,496	$	101,607	$	100,655
After one year but within five years		1,025,359		976,452		408,253		410,049		1,269,157		1,187,686		1,316,874		1,233,725
After five years but within ten years		132,089		121,770		10,851		11,011		202,889		196,755		170,513		163,101
After ten years		45,818		44,173		51,107		51,775		39,502		37,490		42,897		40,740
Total debt securities	$	1,264,397	$	1,203,503	$	528,689	$	531,523	$	1,662,385	$	1,569,427	$	1,631,891	$	1,538,221

The following table is a summary of the Company’s book value of securities that were pledged as collateral for public funds on deposit, repurchase agreements and for other purposes as required or permitted by law:

June 30, 2022

December 31, 2021

(Dollars in thousands)

Book value of pledged securities

$
476,596

$
473,026


	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Book value of pledged securities	$	593,260	$	573,952

The following is a detail of proceeds from sales and the realized losses on available for sale debt securities:


	Six Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
Proceeds	$	222,473	$	—	$	—	$	222,473
Gross losses realized		3,990		—		—		3,990

There were no sales of debt securities and therefore no proceeds from sales or realized securities gains or losses on available for sale debt securities for the six months ended June 30, 2023. During the six months ended June 30, 2022, the Company sold $226 million of debt securities with an average yield of 0.16%, the proceeds of which were subsequently reinvested in $220 million of debt securities with an average yield of 1.86%. The Company used specific identification to reclassify the unrealized loss in other comprehensive income to a realized loss, as shown in the consolidated statements of comprehensive income. ~~There were no sales of debt securities and therefore~~ 0 ~~proceeds from sales or realized securities gains or losses on available for sale debt securities for the six months ended June 30, 2021.~~

Realized gains/losses on debt and equity securities are reported as securities transactions within the noninterest income section of the consolidated statement of comprehensive income.

The following table summarizes debt securities with unrealized losses, segregated by the duration of the unrealized loss, at June 30, ~~2022~~2023 and December 31, ~~2021~~2022 respectively:


			Less than 12 Months				More than 12 Months				Total						Less than 12 Months				More than 12 Months				Total
	Number of investments		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Number of investments		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
			(Dollars in thousands)														(Dollars in thousands)
June 30, 2022
June 30, 2023
Available for Sale
U.S. treasuries		58	$	1,112,058	$	58,843	$	4,853	$	144	$	1,116,911	$	58,987		73	$	414,002	$	13,360	$	1,096,064	$	76,167	$	1,510,066	$	89,527
U.S. federal agencies		2		363		1		—		—		363		1		3		1,305		2		—		—		1,305		2
Mortgage backed securities		71		15,971		1,368		657		61		16,628		1,429		91		1,452		5		13,899		1,864		15,351		1,869
States and political subdivisions		7		2,135		173		195		6		2,330		179		10		2,029		22		1,251		111		3,280		133
Asset backed securities		1		12,877		486		—		—		12,877		486		1		—		—		12,435		349		12,435		349
Other securities		1		2,732		268		—		—		2,732		268		3		4,476		687		2,408		592		6,884		1,279
Total		140	$	1,146,136	$	61,139	$	5,705	$	211	$	1,151,841	$	61,350		181	$	423,264	$	14,076	$	1,126,057	$	79,083	$	1,549,321	$	93,159
December 31, 2021
December 31, 2022
Available for Sale
U.S. treasuries		10	$	298,080	$	1,766	$	—	$	—	$	298,080	$	1,766		74	$	787,925	$	27,078	$	689,939	$	63,621	$	1,477,864	$	90,699
U.S. federal agencies		1		376		2		—		—		376		2		1		—		—		349		1		349		1
Mortgage backed securities		7		2,824		14		—		—		2,824		14		92		10,001		1,239		5,055		645		15,056		1,884
States and political subdivisions		2		505		3		—		—		505		3		8		2,308		184		464		37		2,772		221
Asset backed securities																1		13,010		361		—		—		13,010		361
Other securities		1		2,994		6		—		—		2,994		6		3		4,871		291		2,534		467		7,405		758
Total		21	$	304,779	$	1,791	$	—	$	—	$	304,779	$	1,791		179	$	818,115	$	29,153	$	698,341	$	64,771	$	1,516,456	$	93,924

The Company has the ability and intent to hold the debt securities classified as held for investment until they mature, at which time the Company will receive full value for the debt securities. Furthermore, as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company also had the ability and intent to hold the debt securities classified as available for sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. The Company has no intent or requirement to sell before the recovery of the unrealized loss; therefore, no impairment loss was realized in the Company’s consolidated statement of comprehensive income.

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

Certain loan segments from 2022 have been reclassified to conform to the 2023 presentation. Each loan segment is made up of loan categories possessing similar risk characteristics. The Company’s re-alignment of the segments primarily consisted of reclassifying farmland and agriculture related loans that were previously included in consumer-related and commercial-related loans to the agriculture category. Management believes this accurately represents the risk profile of each loan segment. These reclassifications did not have a significant impact on the allowance for credit losses.

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


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
	(Dollars in thousands)				(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	893,144	$	775,554		969,914		908,494
Commercial real estate non-owner occupied		1,162,912		1,095,324		1,412,476		1,383,150
Construction and development < 60 months		436,658		415,466		549,068		475,236
Construction residential real estate < 60 months		285,090		254,524		276,726		303,305
Residential real estate first lien		1,072,564		937,006		1,189,944		1,117,899
Residential real estate all other		173,914		161,018		219,752		196,198
Farmland		266,790		272,179
Commercial and agricultural non-real estate (2)		1,399,702		1,416,093
Agriculture						422,327		408,037
Commercial non-real estate						1,349,789		1,241,454
Consumer non-real estate		439,723		413,370		457,897		446,756
Oil and gas		482,786		428,908		450,799		463,034
Total (1)	$	6,613,283	$	6,169,442	$	7,298,692	$	6,943,563
(1) Excludes accrued interest receivable of $23.3 million at June 30, 2022 and $21.0 million at December 31, 2021, that is recorded in accrued interest receivable and other assets.
(2) Includes PPP loans held for investment of $3.2 million, net of unamortized processing fees of $0, at June 30, 2022 and $80.4 million, net of unamortized processing fees of $2.0 million, at December 31, 2021.
(1) Excludes accrued interest receivable of $34.3 million at June 30, 2023 and $30.6 million at December 31, 2022, that is recorded in accrued interest receivable and other assets.					(1) Excludes accrued interest receivable of $34.3 million at June 30, 2023 and $30.6 million at December 31, 2022, that is recorded in accrued interest receivable and other assets.

Loans that were designated as Other and consisted mainly of Small Business Administration (“SBA”) loans were moved to their more descriptive portfolio segment. Therefore, we no longer have an Other loan portfolio segment.

~~In April 2020, the Company began originating loans to qualified small businesses under the~~ ~~Paycheck Protection Program~~ (“PPP”) administered by the SBA. Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans. The Company had processing fees, which were recognized as interest income related to the PPP loans totaling approximately $~~400,000~~ ~~and $11.9~~ ~~million during the three months ended June 30, 2022 and 2021, respectively and $2.1~~ ~~million and $21.7~~ ~~million during the six months ended June 30, 2022 and 2021, respectively.~~

The Company's loans are currently 8385% held by BancFirst and 1715% held by Pegasus and Worthington. In addition, approximately 6569% 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 Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

~~Troubled Debt Restructurings,~~Loan Modifications, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets

The following is a summary of ~~troubled debt restructurings and~~ other real estate owned and repossessed assets:

June 30, 2022

December 31, 2021

(Dollars in thousands)

Troubled debt restructurings

$
2,174

$
3,665

Other real estate owned and repossessed assets

$
39,209

$
39,553



	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Other real estate owned and repossessed assets	$	41,612	$	36,936

As of both June 30, 2023 and December 31, 2022, other real estate owned included a commercial real estate property recorded at approximately $32.9 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.


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)
Rental income	$	2,778	$	2,643	$	5,468	$	5,313
Operating expense		2,967		2,299		5,348		4,738

During the six months ended June 30, 2023, the Company sold property held in other real estate owned for a total gain of $266,000, compared to a total gain of $3.8 million in the six months ended June 30, 2022.

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

~~Other real estate owned included a commercial real estate property~~ The recorded atbalance of modified loans was approximately $~~29.7~~9.7 million ~~at June 30, 2022 and $29.5~~ ~~million at December 31, 2021. At December 31, 2021, other real estate owned included approximately $2.4~~ ~~million related to the Company's previous headquarters. The previous headquarters was sold~~ during the ~~second quarter of 2022.~~

~~During the six months~~period ended June 30, ~~2022, the Company sold property held in other real estate owned for a total gain of $~~2023.~~3.8~~ ~~million, compared to a total loss of $105,000~~ ~~in the six months ended June 30, 2021.~~

Nonaccrual loans

The Company did 0not recognize any interest income on nonaccrual loans for either of the six months ended June 30, ~~2022~~2023 or ~~2021.~~2022. In addition, there were 0no nonaccrual loans for which there is no related allowance for credit losses at both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $718,000 for the six months ended June 30, 2023 and approximately $653,000 for the six months ended June 30, ~~2022 and approximately $1.2~~ ~~million for the six months ended June 30, 2021.~~2022.

Nonaccrual loans guaranteed by government agencies totaled approximately $~~2.2~~6.6 million at June 30, ~~2022~~2023 and approximately $~~3.3~~4.7 million at December 31, ~~2021.~~2022.

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


	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
	(Dollars in thousands)				(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	2,224	$	4,351	$	4,360	$	1,795
Commercial real estate non-owner occupied		—		407		706		667
Construction and development < 60 months		101		80		81		93
Construction residential real estate < 60 months		103		—		376		430
Residential real estate first lien		2,537		2,763		2,717		1,947
Residential real estate all other		111		280		845		55
Farmland		2,540		4,224
Commercial and agricultural non-real estate		5,998		7,569
Agriculture						2,141		2,734
Commercial non-real estate						6,497		7,066
Consumer non-real estate		98		148		241		192
Oil and gas		—		1,070		83		320
Total	$	13,712	$	20,892	$	18,047	$	15,299

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)

As of June 30, 2022

  Real estate:

Commercial real estate owner occupied

$
1,578

$
132

$
726

$
2,436

$
890,708

$
893,144

$
374

Commercial real estate non-owner occupied

—

—

36

36

1,162,876

1,162,912

36

Construction and development < 60 months

2,890

113

33

3,036

433,622

436,658

—

Construction residential real estate < 60 months

—

—

103

103

284,987

285,090

—

Residential real estate first lien

3,688

1,038

2,231

6,957

1,065,607

1,072,564

1,600

Residential real estate all other

644

65

637

1,346

172,568

173,914

618

Farmland

600

281

2,246

3,127

263,663

266,790

1,052

  Commercial and agricultural non-real estate

4,029

654

3,522

8,205

1,391,497

1,399,702

496

  Consumer non-real estate

2,542

561

526

3,629

436,094

439,723

512

  Oil and gas

—

159

83

242

482,544

482,786

83

Total

$
15,971

$
3,003

$
10,143

$
29,117

$
6,584,166

$
6,613,283

$
4,771

As of December 31, 2021

  Real estate:

Commercial real estate owner occupied

$
2,046

$
223

$
1,465

$
3,734

$
771,820

$
775,554

$
18

Commercial real estate non-owner occupied

7,244

—

—

7,244

1,088,080

1,095,324

—

Construction and development < 60 months

136

—

—

136

415,330

415,466

—

Construction residential real estate < 60 months

2,264

—

—

2,264

252,260

254,524

—

Residential real estate first lien

3,351

567

2,817

6,735

930,271

937,006

1,704

Residential real estate all other

293

30

451

774

160,244

161,018

431

Farmland

253

37

2,077

2,367

269,812

272,179

139

  Commercial and agricultural non-real estate

2,506

546

7,118

10,170

1,405,923

1,416,093

2,418

  Consumer non-real estate

1,873

321

272

2,466

410,904

413,370

254

  Oil and gas

—

—

—

—

428,908

428,908

—

Total

$
19,966

$
1,724

$
14,200

$
35,890

$
6,133,552

$
6,169,442

$
4,964


	Age Analysis of Past Due Loans
(Dollars in thousands)	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
As of June 30, 2023
Real estate:
Commercial real estate owner occupied	$	2,439	$	1,684	$	6,844	$	10,967	$	958,947	$	969,914	$	4,152
Commercial real estate non-owner occupied		236		8,752		875		9,863		1,402,613		1,412,476		213
Construction and development < 60 months		52		—		984		1,036		548,032		549,068		903
Construction residential real estate < 60 months		1,342		103		543		1,988		274,738		276,726		543
Residential real estate first lien		2,597		1,328		2,534		6,459		1,183,485		1,189,944		879
Residential real estate all other		1,092		280		840		2,212		217,540		219,752		61
Agriculture		833		268		838		1,939		420,388		422,327		50
Commercial non-real estate		3,795		928		6,055		10,778		1,339,011		1,349,789		1,567
Consumer non-real estate		2,405		807		569		3,781		454,116		457,897		431
Oil and gas		236		654		83		973		449,826		450,799		—
Total	$	15,027	$	14,804	$	20,165	$	49,996	$	7,248,696	$	7,298,692	$	8,799

	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
As of December 31, 2022
Real estate:
Commercial real estate owner occupied	$	1,314	$	1,524	$	4,580	$	7,418	$	901,076	$	908,494	$	4,580
Commercial real estate non-owner occupied		6,237		—		42		6,279		1,376,871		1,383,150		43
Construction and development < 60 months		535		40		114		689		474,547		475,236		81
Construction residential real estate < 60 months		1,320		282		148		1,750		301,555		303,305		—
Residential real estate first lien		3,415		1,076		844		5,335		1,112,564		1,117,899		349
Residential real estate all other		265		37		185		487		195,711		196,198		166
Agriculture		2,357		34		2,265		4,656		403,381		408,037		1,054
Commercial non-real estate		2,490		2,142		2,772		7,404		1,234,050		1,241,454		345
Consumer non-real estate		2,591		648		585		3,824		442,932		446,756		467
Oil and gas		654		—		—		654		462,380		463,034		—
Total	$	21,178	$	5,783	$	11,535	$	38,496	$	6,905,067	$	6,943,563	$	7,085

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. These indicators are reviewed and updated regularly throughout the year. 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 and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, ~~2021,~~2022, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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

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


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
As of June 30, 2023
Commercial real estate owner occupied
Grade 1	$	75,514	$	174,029	$	131,583	$	96,065	$	91,649	$	150,940	$	51,100	$	770,880
Grade 2		22,851		42,130		30,830		24,524		19,136		30,000		18,248		187,719
Grade 3		19		—		4,450		1,193		883		1,459		212		8,216
Grade 4		—		314		345		311		1,166		624		—		2,760
Grade 5		—		—		—		—		339		—		—		339
Total commercial real estate owner occupied		98,384		216,473		167,208		122,093		113,173		183,023		69,560		969,914
Commercial real estate non-owner occupied
Grade 1	$	116,433	$	324,990	$	221,196	$	159,511	$	92,137	$	79,849	$	45,799	$	1,039,915
Grade 2		44,955		107,929		43,476		33,416		32,628		71,739		23,609		357,752
Grade 3		—		6,733		5		150		6,207		795		—		13,890
Grade 4		44		820		—		—		—		55		—		919
Total commercial real estate non-owner occupied		161,432		440,472		264,677		193,077		130,972		152,438		69,408		1,412,476
Construction and development < 60 months
Grade 1	$	88,593	$	139,210	$	77,235	$	14,074	$	4,622	$	6,522	$	70,118	$	400,374
Grade 2		42,927		36,862		15,894		1,584		13,984		2,418		33,679		147,348
Grade 3		—		903		103		98		—		7		154		1,265
Grade 4		—		81		—		—		—		—		—		81
Total construction and development < 60 months		131,520		177,056		93,232		15,756		18,606		8,947		103,951		549,068
Construction residential real estate < 60 months
Grade 1	$	106,520	$	80,355	$	1,897	$	257	$	6	$	39	$	33,846	$	222,920
Grade 2		25,787		26,221		38		22		—		388		90		52,546
Grade 3		99		785		—		—		—		—		—		884
Grade 4		376		—		—		—		—		—		—		376
Total construction residential real estate < 60 months		132,782		107,361		1,935		279		6		427		33,936		276,726
Residential real estate first lien
Grade 1	$	160,801	$	256,377	$	189,258	$	130,017	$	78,783	$	168,639	$	3,721	$	987,596
Grade 2		21,024		46,624		35,716		24,654		12,691		44,160		—		184,869
Grade 3		1,236		1,867		2,959		1,035		1,664		3,926		—		12,687
Grade 4		361		177		1,181		292		646		2,135		—		4,792
Total residential real estate first lien		183,422		305,045		229,114		155,998		93,784		218,860		3,721		1,189,944
Residential real estate all other
Grade 1	$	25,642	$	28,209	$	8,615	$	9,218	$	4,625	$	14,003	$	39,561	$	129,873
Grade 2		2,380		4,982		2,202		1,983		1,509		3,476		69,231		85,763
Grade 3		171		422		77		45		146		471		1,877		3,209
Grade 4		—		24		10		26		—		50		797		907
Total residential real estate all other		28,193		33,637		10,904		11,272		6,280		18,000		111,466		219,752
Agriculture
Grade 1	$	32,122	$	61,718	$	39,267	$	32,007	$	18,986	$	36,796	$	39,208	$	260,104
Grade 2		18,303		23,027		19,601		8,718		9,835		17,869		43,466		140,819
Grade 3		6,781		1,204		1,527		3,396		144		3,815		3,255		20,122
Grade 4		59		668		57		169		44		254		31		1,282
Total Agriculture		57,265		86,617		60,452		44,290		29,009		58,734		85,960		422,327
Commercial non-real estate
Grade 1	$	148,198	$	288,490	$	176,959	$	48,809	$	42,278	$	43,672	$	293,889	$	1,042,295
Grade 2		55,938		65,449		28,746		16,090		10,820		21,080		96,657		294,780
Grade 3		1,208		2,284		575		172		619		1,381		2,491		8,730
Grade 4		11		983		348		693		372		279		1,034		3,720
Grade 5		—		—		—		—		264		—		—		264
Total commercial non-real estate		205,355		357,206		206,628		65,764		54,353		66,412		394,071		1,349,789
Consumer non-real estate
Grade 1	$	118,847	$	146,280	$	76,246	$	27,782	$	13,664	$	4,737	$	26,330	$	413,886
Grade 2		7,960		16,721		8,236		2,766		971		1,804		1,642		40,100
Grade 3		155		984		1,013		401		245		115		16		2,929
Grade 4		39		392		352		44		85		25		4		941
Grade 5		—		41		—		—		—		—		—		41
Total consumer non-real estate		127,001		164,418		85,847		30,993		14,965		6,681		27,992		457,897
Oil and gas
Grade 1	$	62,557	$	13,971	$	96,748	$	12,909	$	2,273	$	17,373	$	159,813	$	365,644
Grade 2		6,779		5,334		2,251		432		18,470		255		47,498		81,019
Grade 3		—		2,091		240		3		—		—		1,719		4,053
Grade 4		—		83		—		—		—		—		—		83
Total oil and gas		69,336		21,479		99,239		13,344		20,743		17,628		209,030		450,799
Total loans held for investment	$	1,194,690	$	1,909,764	$	1,219,236	$	652,866	$	481,891	$	731,150	$	1,109,095	$	7,298,692

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
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
Three months ended June 30, 2023
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		2		—		—		—		2
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		—		19		21		—		2		—		42
Residential real estate all other
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Agriculture
Current-period gross charge-offs		—		—		—		301		1		—		—		302
Commercial non-real estate
Current-period gross charge-offs		42		34		1		20		—		5		—		102
Consumer non-real estate
Current-period gross charge-offs		29		186		115		14		28		11		15		398
Oil and gas
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Total current-period gross charge-offs	$	71	$	224	$	135	$	358	$	29	$	18	$	15	$	850


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Total
Six months ended June 30, 2023
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	7	$	1	$	22	$	18	$	—	$	—	$	48
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		—		—		—		3		—		3
Construction and development < 60 months
Current-period gross charge-offs		—		2		—		2		—		—		—		4
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		—		19		21		—		4		—		44
Residential real estate all other
Current-period gross charge-offs		—		4		19		—		1		4		—		28
Agriculture
Current-period gross charge-offs		—		4		—		317		14		2		—		337
Commercial non-real estate
Current-period gross charge-offs		42		101		63		20		—		52		—		278
Consumer non-real estate
Current-period gross charge-offs		29		262		147		29		37		17		17		538
Oil and gas
Current-period gross charge-offs		—		2		—		—		—		—		—		2
Total current-period gross charge-offs	$	71	$	382	$	249	$	411	$	70	$	82	$	17	$	1,282

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 CECL model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist.

~~The increase in allowance for credit loss during 2022 was primarily related to the purchase of loans without credit deterioration during the year.~~14

The decrease in the allowance for credit loss during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit loss within the loan portfolio. This reduction was partially offset by additional allowance for credit loss required for newly acquired loans. The allowance for credit loss for the oil and gas category was reduced due to the increases in oil and gas commodity prices contributing to a more stable and profitable energy industry; however this decrease was entirely offset by an increase in allowance for credit loss for the commercial real estate non-owner occupied category due to ongoing uncertainty regarding the pandemic's long-term impact on the office and retail sectors.

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																	Allowance for Credit Losses
	Balance at beginning of period		Initial allowance on loans purchased with credit deterioration		Charge- offs			Recoveries		Net charge-offs			Provision for /(benefit from) credit losses on loans			Balance at end of period		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)																	(Dollars in thousands)
Three Months Ended June 30, 2022
Three Months Ended June 30, 2023
Real estate:
Commercial real estate owner occupied	$	8,281	$	—	$	(4	)	$	30	$	26		$	(1,362	)	$	6,945	$	6,547	$	—		$	3	$	3		$	258		$	6,808
Commercial real estate non-owner occupied		20,674		—		—			—		—			2,263			22,937		32,120		—			—		—			1,312			33,432
Construction and development < 60 months		3,309		—		—			2		2			417			3,728		3,608		(2	)		3		1			(169	)		3,440
Construction residential real estate < 60 months		2,164		—		—			—		—			128			2,292		3,226		—			—		—			327			3,553
Residential real estate first lien		3,421		—		(5	)		6		1			(39	)		3,383		4,454		(42	)		10		(32	)		333			4,755
Residential real estate all other		2,107		—		(36	)		—		(36	)		(20	)		2,051		1,444		(2	)		1		(1	)		218			1,661
Farmland		4,383		—		—			—		—			(18	)		4,365
Commercial and agricultural non-real estate		27,724		—		(717	)		30		(687	)		796			27,833
Agriculture																			6,268		(302	)		7		(295	)		453			6,426
Commercial non-real estate																			25,079		(102	)		127		25			23			25,127
Consumer non-real estate		3,771		—		(153	)		42		(111	)		434			4,094		4,232		(398	)		35		(363	)		475			4,344
Oil and gas		11,405		—		—			—		—			(2,098	)		9,307		7,782		(2	)		—		(2	)		(406	)		7,374
Total	$	87,239	$	—	$	(915	)	$	110	$	(805	)	$	501		$	86,935	$	94,760	$	(850	)	$	186	$	(664	)	$	2,824		$	96,920
Six Months Ended June 30, 2022
Real estate:
Commercial real estate owner occupied	$	7,568	$	—	$	(20	)	$	78	$	58		$	(681	)	$	6,945
Commercial real estate non-owner occupied		16,987		—		—			—		—			5,950			22,937
Construction and development < 60 months		3,490		—		—			5		5			233			3,728
Construction residential real estate < 60 months		1,092		—		—			—		—			1,200			2,292
Residential real estate first lien		3,076		2		(49	)		13		(36	)		341			3,383
Residential real estate all other		2,104		—		(36	)		402		366			(419	)		2,051
Farmland		4,822		—		—			—		—			(457	)		4,365
Commercial and agricultural non-real estate		28,085		48		(899	)		143		(756	)		456			27,833
Consumer non-real estate		3,734		28		(233	)		80		(153	)		485			4,094
Oil and gas		12,978		—		—			—		—			(3,671	)		9,307
Total	$	83,936	$	78	$	(1,237	)	$	721	$	(516	)	$	3,437		$	86,935


	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)
Six Months Ended June 30, 2023
Real estate:
Commercial real estate owner occupied	$	6,416	$	(48	)	$	52	$	4		$	388		$	6,808
Commercial real estate non-owner occupied		30,190		(3	)		—		(3	)		3,245			33,432
Construction and development < 60 months		3,778		(4	)		6		2			(340	)		3,440
Construction residential real estate < 60 months		3,275		—			—		—			278			3,553
Residential real estate first lien		4,092		(44	)		13		(31	)		694			4,755
Residential real estate all other		1,418		(28	)		3		(25	)		268			1,661
Agriculture		6,217		(337	)		13		(324	)		533			6,426
Commercial non-real estate		25,106		(278	)		149		(129	)		150			25,127
Consumer non-real estate		4,132		(538	)		92		(446	)		658			4,344
Oil and gas		8,104		(2	)		—		(2	)		(728	)		7,374
Total	$	92,728	$	(1,282	)	$	328	$	(954	)	$	5,146		$	96,920

1415


	Allowance for Credit Losses																	Allowance for Credit Losses
	Balance at beginning of period		Initial allowance on loans purchased with credit deterioration		Charge- offs			Recoveries		Net charge-offs			Provision for /(benefit from) credit losses on loans			Balance at end of period		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)																	(Dollars in thousands)
Three Months Ended June 30, 2021
Three Months Ended June 30, 2022
Real estate:
Commercial real estate owner occupied	$	6,505	$	987	$	—		$	1	$	1		$	805		$	8,298	$	8,262	$	(4	)	$	30	$	26		$	(1,360	)	$	6,928
Commercial real estate non-owner occupied		19,115		633		(758	)		—		(758	)		(3,952	)		15,038		16,348		—			—		—			(33	)		16,315
Construction and development < 60 months		2,943		173		—			2		2			(23	)		3,095		3,272		—			2		2			406			3,680
Construction residential real estate < 60 months		1,092		—		—			—		—			(94	)		998		1,103		—			—		—			80			1,183
Residential real estate first lien		2,937		117		(9	)		12		3			(136	)		2,921		3,394		(5	)		6		1			(40	)		3,355
Residential real estate all other		1,880		—		(30	)		1		(29	)		112			1,963		1,560		(36	)		—		(36	)		(44	)		1,480
Farmland		3,088		643		—			1		1			(5	)		3,727
Commercial and agricultural non-real estate		35,439		4,711		(3,442	)		125		(3,317	)		(2,523	)		34,310
Agriculture																			8,018		—			4		4			(66	)		7,956
Commercial non-real estate																			25,163		(717	)		26		(691	)		898			25,370
Consumer non-real estate		3,421		8		(209	)		86		(123	)		175			3,481		3,730		(153	)		42		(111	)		431			4,050
Oil and gas		14,440		—		—			—		—			(4,308	)		10,132		16,389		—			—		—			229			16,618
Total	$	90,860	$	7,272	$	(4,448	)	$	228	$	(4,220	)	$	(9,949	)	$	83,963	$	87,239	$	(915	)	$	110	$	(805	)	$	501		$	86,935
Six Months Ended June 30, 2021
Real estate:
Commercial real estate owner occupied	$	8,470	$	987	$	—		$	1	$	1		$	(1,160	)	$	8,298
Commercial real estate non-owner occupied		12,318		633		(796	)		—		(796	)		2,883			15,038
Construction and development < 60 months		2,723		173		—			5		5			194			3,095
Construction residential real estate < 60 months		726		—		—			—		—			272			998
Residential real estate first lien		2,822		117		(52	)		27		(25	)		7			2,921
Residential real estate all other		2,236		—		(46	)		4		(42	)		(231	)		1,963
Farmland		3,153		643		—			1		1			(70	)		3,727
Commercial and agricultural non-real estate		34,643		4,711		(3,598	)		152		(3,446	)		(1,598	)		34,310
Consumer non-real estate		3,542		8		(622	)		198		(424	)		355			3,481
Oil and gas		20,733		—		—			—		—			(10,601	)		10,132
Total	$	91,366	$	7,272	$	(5,114	)	$	388	$	(4,726	)	$	(9,949	)	$	83,963


	Allowance for Credit Losses
	Balance at beginning of period		Initial allowance on loans purchased with credit deterioration		Charge- offs			Recoveries		Net charge-offs			Provision for /(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)
Six Months Ended June 30, 2022
Real estate:
Commercial real estate owner occupied	$	7,550	$	—	$	(20	)	$	78	$	58		$	(680	)	$	6,928
Commercial real estate non-owner occupied		16,807		—		—			—		—			(492	)		16,315
Construction and development < 60 months		3,454		—		—			5		5			221			3,680
Construction residential real estate < 60 months		1,051		—		—			—		—			132			1,183
Residential real estate first lien		3,048		2		(49	)		13		(36	)		341			3,355
Residential real estate all other		1,567		—		(36	)		402		366			(453	)		1,480
Agriculture		8,392		—		(125	)		7		(118	)		(318	)		7,956
Commercial non-real estate		25,565		48		(774	)		136		(638	)		395			25,370
Consumer non-real estate		3,694		28		(233	)		80		(153	)		481			4,050
Oil and gas		12,808		—		—			—		—			3,810			16,618
Total	$	83,936	$	78	$	(1,237	)	$	721	$	(516	)	$	3,437		$	86,935

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 six month period ended June 30, 2023. The credit-deteriorated loans purchased during the ~~six-month periods~~six months ended June 30, 2022 ~~and June 30, 2021~~ were as follows:


	Loans acquired with deteriorated credit quality
	(Dollars in thousands)
For the period ended June 30, 2022
Purchase price of loans at acquisition	$	661
Allowance for credit losses at acquisition		78
Par value of acquired loans at acquisition	$	739

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 six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, 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												Collateral Type
	Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation		Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation
	(Dollars in thousands)												(Dollars in thousands)
As of June 30, 2022
As of June 30, 2023
Real estate:
Commercial real estate owner occupied	$	1,671	$	—	$	—	$	—	$	1,671	$	555	$	2,129	$	—	$	—	$	—	$	2,129	$	863
Commercial real estate non-owner occupied		1,146		—		—		—		1,146		214		664		—		—		—		664		270
Construction and development < 60 months		—		—		—		—		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months		—		—		—		—		—		—		376		—		—		—		376		45
Residential real estate first lien		734		—		—		—		734		107		371		—		—		—		371		118
Residential real estate all other		34		—		—		—		34		15		41		—		—		—		41		19
Farmland		6,341		—		—		—		6,341		1,157
Commercial and agricultural non-real estate		—		4,441		—		5,344		9,785		3,837
Agriculture														3,436		672		—		3,068		7,176		2,694
Commercial non-real estate														—		4,879		—		—		4,879		1,747
Consumer non-real estate		—		—		—		39		39		35		—		—		—		93		93		56
Oil and gas		—		—		—		—		—		—		—		—		—		—		—		—
Total collateral-dependent loans held for investment	$	9,926	$	4,441	$	—	$	5,383	$	19,750	$	5,920	$	7,017	$	5,551	$	—	$	3,161	$	15,729	$	5,812

	Collateral Type												Collateral Type
	Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation		Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation
	(Dollars in thousands)												(Dollars in thousands)
As of December 31, 2021
As of December 31, 2022
Real estate:
Commercial real estate owner occupied	$	1,952	$	—	$	—	$	—	$	1,952	$	576	$	2,213	$	—	$	—	$	—	$	2,213	$	870
Commercial real estate non-owner occupied		1,404		—		—		—		1,404		263		1,263		—		—		—		1,263		333
Construction and development < 60 months		—		—		—		—		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months		—		—		—		—		—		—		420		—		—		—		420		45
Residential real estate first lien		871		—		—		—		871		143		481		—		—		—		481		207
Residential real estate all other		199		—		—		—		199		178		9		—		—		—		9		9
Farmland		8,703		—		—		—		8,703		1,805
Commercial and agricultural non-real estate		—		6,472		—		5,202		11,674		4,938
Agriculture														3,447		701		—		3,592		7,740		3,114
Commercial non-real estate														—		5,924		—		4		5,928		1,938
Consumer non-real estate		—		—		—		54		54		20		—		—		—		117		117		81
Oil and gas		—		—		—		—		—		—		—		—		—		—		—		—
Total collateral-dependent loans held for investment	$	13,129	$	6,472	$	—	$	5,256	$	24,857	$	7,923	$	7,833	$	6,625	$	—	$	3,713	$	18,171	$	6,597

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 consolidated 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,

2022

2021

(Dollars in thousands)

Other real estate owned

$
4,065

$
9,438

Repossessed assets

503

427

Total

$
4,568

$
9,865

(5) INTANGIBLE ASSETS AND GOODWILL

The following is a summary of intangible assets as of the date listed:


	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Dollars in thousands)							(Dollars in thousands)
June 30, 2022
June 30, 2023
Core deposit intangibles	$	33,298	$	(11,914	)	$	21,384	$	33,298	$	(15,316	)	$	17,982
Customer relationship intangibles		3,350		(2,991	)		359		3,350		(3,109	)		241
Total	$	36,648	$	(14,905	)	$	21,743	$	36,648	$	(18,425	)	$	18,223
December 31, 2021
December 31, 2022
Core deposit intangibles	$	27,433	$	(10,311	)	$	17,122	$	33,298	$	(13,615	)	$	19,683
Customer relationship intangibles		3,350		(2,906	)		444		3,350		(3,050	)		300
Total	$	30,783	$	(13,217	)	$	17,566	$	36,648	$	(16,665	)	$	19,983

The following is a summary of goodwill by business segment:

Metropolitan Banks

Community Banks

Pegasus

Worthington

Other Financial Services

Executive, Operations & Support

Consolidated

(Dollars in thousands)

Six months ended June 30, 2022

Balance at beginning of period

$
13,767

$
61,212

$
68,855

$
0

$
5,464

$
624

$
149,922

Acquisitions

—

—

—

33,717

—

—

33,717

Balance at end of period

$
13,767

$
61,212

$
68,855

$
33,717

$
5,464

$
624

$
183,639




	BancFirst Metropolitan Banks		BancFirst Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support		Consolidated
	(Dollars in thousands)
Six months ended June 30, 2023
Balance at beginning and end of period	$	13,767	$	61,212	$	68,855	$	32,133	$	5,464	$	624	$	182,055

The Company acquired Worthington on February 8, 2022, which added core deposit intangibles and goodwill shown in the tables above. See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.

Additional information for intangible assets can be found in Note (7) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

(6) ~~LEASES~~

~~Lessee~~

~~The Company has operating leases, which primarily consist of office space in buildings, ATM locations, storage facilities, parking lots, equipment and land on which it owns certain buildings.~~

~~The following table presents rent expense for all operating leases, including those rented on a monthly or temporary basis as of the periods indicated:~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(Dollars in thousands)

Rental expense

$
491

$
463

$
916

$
966

~~As of June 30, 2022, the right of use lease asset included in accrued interest receivable and~~ ~~other assets~~ ~~on the consolidated balance sheet totaled $5.3~~ ~~million, and a related~~ ~~lease liability~~ ~~included in accrued interest payable and other liabilities on the consolidated balance sheet totaled $5.2~~ ~~million. As of June 30, 2022, the Company's operating leases have a weighted-average remaining lease term of~~ ~~3.4~~ ~~years and a weighted-average discount rate of~~ ~~2.3~~ ~~percent.~~

The following table presents minimum future commitments by year for the Company’s operating leases. Such commitments are reflected as undiscounted values and are reconciled to the discounted present value recognized on the consolidated balance sheet.

June 30, 2022

(Dollars in thousands)

2022 (six months)

$
929

2023

1,565

2024

1,205

2025

989

2026

647

Thereafter

1,314

Total lease payments

6,649

Less imputed Interest

(1,483
)
Operating lease liability

$
5,166

~~Lessor~~

The Company is a lessor of operating leases, which primarily consist of office space in buildings and parking lots. These assets are classified on the consolidated balance sheet as premises and equipment. The Company had operating lease revenue of $~~1.4~~ ~~million and $1.3~~ ~~million for the three months ended June 30, 2022 and June 30, 2021, respectively. The Company had operating lease revenue of $2.7~~ ~~million for both six months ended June 30, 2022 and June 30, 2021. Lease revenue is included in occupancy, net on the consolidated statement of comprehensive income.~~

~~The Company does not have operating leases that extend beyond 2031.~~ ~~The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:~~

June 30, 2022

(Dollars in thousands)

2022 (six months)

$
1,872

2023

3,043

2024

2,918

2025

2,213

2026

1,847

2027-2031

3,559

Total future minimum lease payments

$
15,452

~~(8)~~(7) STOCK-BASED COMPENSATION

The Company ~~has~~ had a nonqualified incentive stock option plan, the BancFirst Corporation Stock Option Plan (the “Employee Plan”), ~~since May 1986. At June 30, 2022, there were~~ ~~133,500~~ ~~shares available for future grants. The Employee Plan will terminate~~which was terminated on ~~December 31, 2024~~June 1, 2023~~, if not extended.~~. The remaining options will continue to vest ~~The options vest~~ and are exercisable beginning four years from the date of grant at the rate of 25% per year for four years~~. Options~~, and expire no later than the end of fifteen years from the date of grant. ~~The option price must be no less than~~ ~~100% of the fair value of the stock relating to such option at the date of grant.~~

The Company ~~has~~ had the BancFirst Corporation Non-Employee Directors’ Stock Option Plan (the “Non-Employee Directors’ Plan”) ~~since June 1999. Each non-employee director is granted an option for~~ ~~10,000~~ ~~shares. At June 30, 2022, there were~~ ~~65,000~~ ~~shares available for future grants. The Non-Employee Directors’ Plan will terminate~~, which was terminated on ~~December 31, 2024~~June 1, 2023~~, if not extended.~~. The remaining options will continue to vest and are exercisable beginning one year from the date of grant at the rate of 25% per year for four years, and expire no later than the end of fifteen years from the date of grant.

On May 25, 2023, the shareholders of the Company adopted the BancFirst Corporation 2023 Restricted Stock Unit Plan (the "RSU Plan"). The ~~option price must be no less than~~RSU Plan was effective as of June 1, 2023 and for a period of ~~100~~ten years thereafter. The RSU Plan shall continue in effect after such ten-year period until all matters relating to the payment of awards and administration of the RSU Plan have been settled. At June 30, 2023 there were 497,375 shares available for future grants. The restricted stock units ("RSU") vest beginning two years from the date of grant at the rate of 20% ~~of the~~per year for five years. The fair value of each RSU granted is equal to the market price of the Company’s stock ~~relating to such option~~ at ~~the~~ date of grant.

The Company currently uses newly issued shares for stock option exercises and restricted stock units, but reserves the right to use shares purchased under the Company’s Stock Repurchase Program (the “SRP”) in the future.

Although not required or expected, the Company may settle some options or restricted stock units in cash on a limited basis at the discretion of the Company. ~~During~~The Company had no cash settlements during the six months ended June 30, ~~2021, the Company had cash settlements for~~ 2023 or June 30, 2022.~~121,330~~ ~~shares for a total net cash settlement of options of $5.5~~ ~~million that did not increase the outstanding shares of the Company.~~

The following table is a summary of the activity under both the Employee Plan and the Non-Employee Directors’ Plan:

Wgtd. Avg.

Wgtd. Avg.

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Options

Price

Term

Value

(Dollars in thousands, except option data)

Six Months Ended June 30, 2022

Outstanding at December 31, 2021

1,303,250

$
40.90

Options granted

135,000

81.90

Options exercised

(164,792
)

26.05

Options canceled, forfeited, or expired

(5,000
)

74.90

Outstanding at June 30, 2022

1,268,458

47.06

8.32 Yrs

$
61,713

Exercisable at June 30, 2022

516,458

29.79

7.06 Yrs

$
34,043


						Wgtd. Avg.
				Wgtd. Avg.		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Options			Price		Term	Value
	(Dollars in thousands, except option data)
Six Months Ended June 30, 2023
Outstanding at December 31, 2022		1,310,290		$	52.51
Exercised		(45,899	)		33.54
Canceled, forfeited, or expired		(8,500	)		87.97
Outstanding at June 30, 2023		1,255,891			52.96	10.18 Yrs.	$	49,029
Exercisable at June 30, 2023		477,266			31.74	6.41 Yrs.	$	28,760

The following table has additional information regarding options exercised under both the Employee Plan and the Non-Employee Directors’ Plan:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)
Total intrinsic value of options exercised	$	2,979	$	557	$	8,943	$	7,860	$	1,979	$	2,979	$	2,331	$	8,943
Cash received from options exercised		1,303		413		4,292		4,379		1,318		1,303		1,539		4,292
Tax benefit realized from options exercised		716		142		2,150		2,002		475		716		560		2,150

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each option is expensed over its vesting period.

~~The following table is a summary of the Company’s recorded stock-based compensation expense:~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

(Dollars in thousands)

(Dollars in thousands)

Stock-based compensation expense

$
460

$
473

$
918

$
1,049

Tax benefit

111

114

221

252

Stock-based compensation expense, net of tax

$
349

$
359

$
697

$
797

~~The Company will continue to amortize the unearned stock-based compensation expense over the remaining vesting period of approximately~~ ~~seven years. The following table shows the unearned stock-based compensation expense:~~

June 30, 2022

(Dollars in thousands)

Unearned stock-based compensation expense

$
9,981

~~The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:~~

Six Months Ended June 30,

2022

2021

Weighted average grant-date fair value per share of options granted

$
29.08

$
23.74

Risk-free interest rate

1.75 to 3.25%

1.34 to1.74%

Dividend yield

2.00%

2.00%

Stock price volatility

34.61 to 34.71%

35.55 to 36.01%

Expected term

10 Yrs

10 Yrs

The risk-free interest rate is determined by reference to the spot zero-coupon rate for the U.S. Treasury security with a maturity similar to the expected term of the options. The dividend yield is the expected yield for the expected term. The stock price volatility is estimated from the recent historical volatility of the Company’s stock. The expected term is estimated from the historical option exercise experience. The Company accounts for forfeitures as they occur.No stock options were granted during the six months ended June 30, 2023.

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:


	Six Months Ended June 30,
	2023		2022
Weighted average grant-date fair value per share of options granted	$	—	$	29.08
Risk-free interest rate		—	1.75 to 3.25%
Dividend yield		—	2.00%
Stock price volatility		—	34.61 to 34.71%
Expected term		—	10 Yrs

The following table is a summary of the activity under the Company's RSU plan.



			Wgtd. Avg.
	Restricted		Grant Date
	Stock Units		Fair Value
Six Months Ended June 30, 2023
Nonvested at December 31, 2022		—
Granted		2,625	$	93.66
Nonvested at June 30, 2023		2,625

The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “Deferred Stock Compensation Plan”) since May 1999. As of June 30, ~~2022,~~2023, there are ~~29,879~~22,252 shares available for future issuance under the Deferred Stock Compensation Plan. The Deferred Stock Compensation Plan will terminate on December 31, 2024, if not extended. Under the plan, directors and members of the community advisory boards of the Company and its subsidiaries may defer up to 100% of their board fees. They are credited for each deferral with a number of stock units based on the current market price of the Company’s stock, which accumulate in an account until such time as the director or community board member terminates serving as a board member. Shares of common stock of the Company are then distributed to the terminating director or community board member based upon the number of stock units accumulated in his or her account. There were ~~13,288~~17,797 and ~~2,161~~13,288 shares of common stock distributed from the Deferred Stock Compensation Plan during the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

A summary of the accumulated stock units is as follows:

June 30,

December 31,

2022

2021

Accumulated stock units

143,712

152,754

Average price

$
32.79

$
30.86


	June 30,		December 31,
	2023		2022
Accumulated stock units		115,848		129,609
Average price	$	38.26	$	34.91

Stock-based compensation expense is charged to salaries and benefits expense on the Consolidated Statements of Comprehensive Income.

The components of stock-based compensation expense for all share-based compensation plans and related tax benefits are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
Stock-based compensation expense	$	831	$	460	$	1,213	$	918
Tax benefit		200		111		292		221
Stock-based compensation expense, net of tax	$	631	$	349	$	921	$	697

The Company will continue to amortize the unearned stock-based compensation expense over the remaining vesting period of approximately seven years. The following table shows the unearned stock-based compensation expense:


	June 30, 2023
	(Dollars in thousands)
Unearned stock-based compensation expense	$	11,867

~~(9)~~(8) STOCKHOLDERS’ EQUITY

In November 1999, the Company adopted the SRP. The SRP may be used as a means to increase earnings per share and return on equity. In addition, the SRP may be used to purchase treasury stock for the exercise of stock options or for distributions under the Deferred Stock Compensation Plan, to provide liquidity for optionees to dispose of stock from exercises of their stock options and to provide liquidity for stockholders wishing to sell their stock. All shares repurchased under the SRP have been retired and not held as treasury stock. The timing, price and amount of stock repurchases under the SRP may be determined by management and approved by the Company’s Executive Committee. ~~During September 2021, the SRP was amended to permit the repurchase of an additional~~ ~~650,000~~ ~~shares.~~

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

Six Months Ended
June 30,

2022

2021

Number of shares repurchased

—

—

Average price of shares repurchased

$
—

$
—

Shares remaining to be repurchased

500,486

62,782



	June 30, 2023
Shares remaining to be repurchased		500,486

BancFirst Corporation, BancFirst, Pegasus and Worthington are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (“FDIC”). These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of BancFirst Corporation’s, BancFirst’s, Pegasus’s and Worthington's assets, liabilities and certain off-balance-sheet items calculated under regulatory practices. Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by the regulatory agencies that could have a direct material effect on the Company’s consolidated financial statements. The Company believes that as of June 30, ~~2022,~~2023, BancFirst Corporation, BancFirst, Pegasus and Worthington met all capital adequacy requirements to which they are subject. The actual and required capital amounts and ratios are shown in the following table:

Required

To Be Well

For Capital

With

Capitalized Under

Adequacy

Capital Conservation

Prompt Corrective

Actual

Purposes

Buffer

Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)
As of June 30, 2022:

Total Capital

(to Risk Weighted Assets)-

BancFirst Corporation

$
1,198,933

16.02%

$
599,086

8.00%

$
786,300

10.50%

N/A

N/A
BancFirst

1,036,057

16.41%

504,967

8.00%

662,769

10.50%

$
631,209

10.00%
Pegasus

101,936

11.68%

69,794

8.00%

91,605

10.50%

87,243

10.00%
Worthington

43,784

15.14%

23,138

8.00%

30,369

10.50%

28,923

10.00%
Common Equity Tier 1 Capital

(to Risk Weighted Assets)-

BancFirst Corporation

$
1,026,801

13.72%

$
336,986

4.50%

$
524,200

7.00%

N/A

N/A
BancFirst

939,308

14.88%

284,044

4.50%

441,846

7.00%

$
410,286

6.50%
Pegasus

94,663

10.85%

39,259

4.50%

61,070

7.00%

56,708

6.50%
Worthington

40,248

13.92%

13,015

4.50%

20,246

7.00%

18,800

6.50%
Tier 1 Capital

(to Risk Weighted Assets)-

BancFirst Corporation

$
1,052,801

14.07%

$
449,314

6.00%

$
636,529

8.50%

N/A

N/A
BancFirst

959,308

15.20%

378,725

6.00%

536,527

8.50%

$
504,967

8.00%
Pegasus

94,663

10.85%

52,346

6.00%

74,157

8.50%

69,794

8.00%
Worthington

40,248

13.92%

17,354

6.00%

24,584

8.50%

23,138

8.00%
Tier 1 Capital

(to Total Assets)-

BancFirst Corporation

$
1,052,801

8.47%

$
497,366

4.00%

N/A

N/A

N/A

N/A
BancFirst

959,308

9.10%

421,682

4.00%

N/A

N/A

$
527,102

5.00%
Pegasus

94,663

7.04%

53,773

4.00%

N/A

N/A

67,216

5.00%
Worthington

40,248

8.00%

20,129

4.00%

N/A

N/A

25,162

5.00%


				Required						To Be Well
				For Capital			With			Capitalized Under
				Adequacy			Capital Conservation			Prompt Corrective
	Actual			Purposes			Buffer			Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
As of June 30, 2023:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,393,706	16.81%	$	663,195	8.00%	$	870,444	10.50%	N/A		N/A
BancFirst		1,160,255	16.23%		571,919	8.00%		750,644	10.50%	$	714,899	10.00%
Pegasus		138,455	17.62%		62,861	8.00%		82,505	10.50%		78,576	10.00%
Worthington		49,963	13.30%		30,055	8.00%		39,447	10.50%		37,568	10.00%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,211,518	14.61%	$	373,047	4.50%	$	580,296	7.00%	N/A		N/A
BancFirst		1,054,783	14.75%		321,705	4.50%		500,429	7.00%	$	464,684	6.50%
Pegasus		130,150	16.56%		35,359	4.50%		55,003	7.00%		51,074	6.50%
Worthington		46,200	12.30%		16,906	4.50%		26,698	7.00%		24,419	6.50%
Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	1,237,518	14.93%	$	497,396	6.00%	$	704,645	8.50%	N/A		N/A
BancFirst		1,074,783	15.03%		428,940	6.00%		607,664	8.50%	$	571,919	8.00%
Pegasus		130,150	16.56%		47,145	6.00%		66,789	8.50%		62,861	8.00%
Worthington		46,200	12.30%		22,541	6.00%		31,933	8.50%		30,055	8.00%
Tier 1 Capital
(to Quarterly Average Assets)-
BancFirst Corporation	$	1,237,518	10.50%	$	471,255	4.00%	N/A		N/A	N/A		N/A
BancFirst		1,074,783	10.63%		401,047	4.00%	N/A		N/A	$	501,309	5.00%
Pegasus		130,150	10.41%		50,026	4.00%	N/A		N/A		62,532	5.00%
Worthington		46,200	9.18%		20,136	4.00%	N/A		N/A		25,171	5.00%

As of June 30, ~~2022,~~2023, the most recent notifications from the Federal Reserve Bank of Kansas City, the FDIC and the Comptroller of the Currency, categorized BancFirst, Pegasus and Worthington as “well capitalized” under the prompt corrective action provisions. The Common Equity Tier 1 Capital of BancFirst Corporation, BancFirst, Pegasus and Worthington includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, the election was made to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1 Capital. Common Equity Tier 1 Capital for BancFirst Corporation, BancFirst, Pegasus and Worthington is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. The Company’s trust preferred securities have continued to be included in Tier 1 capital, as the Company’s total assets do not exceed $15 billion. The Company's Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. There are no conditions or events since the most recent notifications to BancFirst Corporation, BancFirst, Pegasus and Worthington of their capital category that management believes would materially change their category under capital requirements existing as of the report date.

~~On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $~~60

~~million aggregate principal amount of Subordinated Notes. The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines.~~

In April 2020, the Company began originating loans to qualified small businesses under the PPP administered by the SBA. Federal bank regulatory agencies have issued an interim final rule that permits banks to neutralize the regulatory capital effects of participating in the Paycheck Protection Program Lending Facility (the “PPP Facility”) and clarify that PPP loans have a 220

percent risk weight under applicable risk-based capital rules. Specifically, a bank may exclude all PPP loans pledged as collateral to the PPP Facility from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPP Facility are included. The PPP loans the Company originated in 2021 and 2020 are included in the calculation of the Company’s leverage ratio as of June 30, 2022 as the Company did not utilize the PPP Facility for funding purposes.

~~(10)~~(9) NET INCOME PER COMMON SHARE

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


	Income (Numerator)		Shares (Denominator)		Per Share Amount		Income (Numerator)		Shares (Denominator)		Per Share Amount
	(Dollars in thousands, except per share data)						(Dollars in thousands, except per share data)
Three Months Ended June 30, 2023
Basic
Income available to common stockholders							$	55,010		32,920,497	$	1.67
Dilutive effect of stock options								—		546,757
Diluted
Income available to common stockholders plus assumed exercises of stock options							$	55,010		33,467,254	$	1.64
Three Months Ended June 30, 2022
Basic
Income available to common stockholders	$	44,707		32,749,752	$	1.36	$	44,707		32,749,752	$	1.36
Dilutive effect of stock options		—		668,730				—		668,730
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	44,707		33,418,482	$	1.34	$	44,707		33,418,482	$	1.34
Three Months Ended June 30, 2021
Six Months Ended June 30, 2023
Basic
Income available to common stockholders	$	48,192		32,779,227	$	1.47	$	112,543		32,906,753	$	3.42
Dilutive effect of stock options		—		626,696				—		559,178
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	48,192		33,405,923	$	1.45	$	112,543		33,465,931	$	3.36
Six Months Ended June 30, 2022
Basic
Income available to common stockholders	$	80,622		32,708,563	$	2.46	$	80,622		32,708,563	$	2.46
Dilutive effect of stock options		—		658,236				—		658,236
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	80,622		33,366,799	$	2.42	$	80,622		33,366,799	$	2.42
Six Months Ended June 30, 2021
Basic
Income available to common stockholders	$	90,712		32,768,102	$	2.77
Dilutive effect of stock options		—		639,591
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	90,712		33,407,693	$	2.72

The following table shows the number ~~and average exercise price~~ of options that were excluded from the computation of diluted net income per common share for each period because the options were anti-dilutive for the period:


	Shares
Three Months Ended June 30, 2023		305,407
Three Months Ended June 30, 2022		122,489
~~Three~~Six Months Ended June 30, ~~2021~~2023		~~43,093~~	307,608
Six Months Ended June 30, 2022		131,779
~~Six Months Ended June 30, 2021~~		~~108,055~~

~~(11)~~(10) FAIR VALUE MEASUREMENTS

Accounting standards define fair value as the price that would be received to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date.

FASB Accounting Standards Codification (“ASC”) Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

•

Level 1 Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•

Level 2 Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument.

•

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. This category includes certain collaterally dependent loans, repossessed assets, other real estate owned, goodwill and other intangible assets.

Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

A description of the valuation methodologies and key inputs used to measure financial assets and financial liabilities at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to the following categories of the Company’s financial assets and financial liabilities.

Debt Securities Available for Sale

Debt securities classified as available for sale are reported at fair value. U.S. Treasuries are valued using Level 1 inputs. Other debt securities available for sale including U.S. federal agencies, registered mortgage backed debt securities and state and political subdivisions are valued using prices from an independent pricing service utilizing Level 2 data. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the bond’s terms and conditions, among other things. The Company also invests in private label mortgage backed debt securities for which observable information is not readily available. These debt securities are reported at fair value utilizing Level 3 inputs. For these debt securities, management determines the fair value based on replacement cost, the income approach or information provided by outside consultants or lead investors. Discount rates are primarily based on reference to interest rate spreads on comparable debt securities of similar duration and credit rating as determined by the nationally recognized rating agencies adjusted for a lack of trading volume. Significant unobservable inputs are developed by investment securities professionals involved in the active trading of similar debt securities.

The Company reviews the prices for Level 1 and Level 2 debt securities supplied by the independent pricing service for reasonableness and to ensure such prices are aligned with traditional pricing matrices. In general, the Company does not purchase investment portfolio debt securities that are esoteric or that have complicated structures. The Company’s portfolio primarily consists of traditional investments including U.S. Treasury obligations, federal agency mortgage pass-through debt securities, general obligation municipal bonds and a small amount of municipal revenue bonds. Pricing for such instruments is fairly generic and is easily obtained. For in-state bond issues that have relatively low issue sizes and liquidity, the Company utilizes the same parameters for pricing mentioned in the preceding paragraph adjusted for the specific issue. Periodically, the Company will validate prices supplied by the independent pricing service by comparison to prices obtained from third party sources.

Derivatives

Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains dealer and market quotations to value its oil and gas swaps and options. The Company utilizes dealer quotes and observable market data inputs to substantiate internal valuation ~~model.~~models.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of the periods presented, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
	(Dollars in thousands)								(Dollars in thousands)
June 30, 2022
June 30, 2023
Debt securities available for sale:
U.S. Treasury	$	1,146,858	$	—	$	—	$	1,146,858	$	1,510,066	$	—	$	—	$	1,510,066
U.S. federal agencies		—		18,871		—		18,871		—		13,536		—		13,536
Mortgage-backed securities		—		17,289		—		17,289		—		15,620		—		15,620
States and political subdivisions		—		4,666		210		4,876		—		10,459		427		10,886
Asset backed securities		—		12,877		—		12,877		—		12,435		—		12,435
Other debt securities		—		2,732		—		2,732		—		6,884		—		6,884
Derivative assets		—		55,174		—		55,174		—		23,340		—		23,340
Derivative liabilities		—		53,943		—		53,943		—		21,813		—		21,813

December 31, 2021
December 31, 2022
Debt securities available for sale:
U.S. Treasury	$	457,628	$	—	$	—	$	457,628	$	1,477,864	$	—	$	—	$	1,477,864
U.S. federal agencies		—		21,942		—		21,942		—		15,222		—		15,222
Mortgage-backed securities		—		29,283		—		29,283		—		16,586		—		16,586
States and political subdivisions		—		5,999		320		6,319		—		7,680		454		8,134
Asset backed securities		—		13,357		—		13,357		—		13,010		—		13,010
Other debt securities				2,994				2,994				7,405				7,405
Derivative assets		—		8,946		—		8,946		—		20,745		—		20,745
Derivative liabilities		—		8,237		—		8,237		—		19,683		—		19,683

The changes in Level 3 assets measured at estimated fair value on a recurring basis during the periods presented were as follows:


	Six Months Ended June 30,			Twelve Months Ended December 31,			Six Months Ended June 30,			Twelve Months Ended December 31,
	2022			2021			2023			2022
	(Dollars in thousands)						(Dollars in thousands)
Balance at the beginning of the year	$	320		$	12,869		$	454		$	320
Transfers to level 2		—			(12,714	)
Purchases		—			240			—			255
Settlements		(110	)		(75	)		(30	)		(110	)
Total unrealized gain								3			(11	)
Balance at the end of the period	$	210		$	320		$	427		$	454

The Company’s policy is to recognize transfers in and transfers out of Levels 1, 2 and 3 as of the end of the reporting period. During the six months ended June 30, 2023, the Company did not transfer any debt securities. In addition, during the year ended December 31, 2022, the Company did not transfer any debt securities. During the year ended December 31, 2021, the Company transferred debt securities from Level 3 to Level 2 due to a review of the pricing models that determined some asset backed debt securities to be Level 2.

Financial Assets and Financial Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These financial assets and financial liabilities are reported at fair value utilizing Level 3 inputs.

The Company invests in equity securities without readily determinable fair values and utilizes Level 3 inputs. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income.

Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is dependent on liquidation of the collateral. When the Company determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit

losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. In no case does the fair value of a collateral dependent loan exceed the fair value of the underlying collateral. The collateral dependent loans are adjusted to fair value through a specific allocation of the allowance for credit losses or a direct charge-down of the loan.

Repossessed assets, upon initial recognition, are measured and adjusted to fair value through a charge-off to the allowance for possible credit losses based upon the fair value of the repossessed asset.

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

The following table summarizes assets measured at fair value on a nonrecurring basis during the period presented. These nonrecurring fair values do not represent all assets, only those assets that have been adjusted during the reporting period:


	Total Fair Value		Total Fair Value
	Level 3		Level 3
	(Dollars in thousands)		(Dollars in thousands)
As of and for the Year-to-date Period Ended June 30, 2022
As of and for the Year-to-date Period Ended June 30, 2023
Equity securities	$	10,249	$	15,172
Collateral dependent loans		525		122
Repossessed assets		110		320
Other real estate owned		2,300		5,100
As of and for the Year-to-date Period Ended December 31, 2021
As of and for the Year-to-date Period Ended December 31, 2022
Equity securities	$	10,590	$	15,512
Collateral dependent loans		13,195		1,618
Repossessed assets		78		180
Other real estate owned		7,496		34,999

Estimated Fair Value of Financial Instruments

The Company is required under current authoritative accounting guidance to disclose the estimated fair value of their financial instruments that are not recorded at fair value. For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. A financial instrument is defined as cash, evidence of an ownership interest in an entity or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity. The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and Cash Equivalents Include: Cash and Due from Banks and Interest-Bearing Deposits with Banks

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

Federal Funds Sold

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

Debt Securities Held for Investment

For debt securities held for investment, which are generally traded in secondary markets, fair values are based on quoted market prices or dealer quotes, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar debt securities making adjustments for credit or liquidity if applicable.

Loans Held For Sale

The Company originates mortgage loans to be sold. At the time of origination, the acquiring bank has already been determined and the terms of the loan, including interest rate, have already been set by the acquiring bank, allowing the Company to originate the loan at fair value. Mortgage loans are generally sold within 30 days of origination. Loans held for sale are valued using Level 2 inputs. Gains or losses recognized upon the sale of the loans are determined on a specific identification basis.

Loans Held For Investment

To determine the fair value of loans held for investment, the Company uses an exit price calculation, which takes into account factors such as liquidity, credit and the nonperformance risk of loans. For certain homogeneous categories of loans, such as some residential mortgages, fair values are estimated using the quoted market prices for securities backed by similar loans, adjusted for

differences in loan characteristics. The fair values of other types of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits

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

Short-Term Borrowings

The amounts payable on these short-term instruments are reasonable estimates of fair value.

Subordinated Debt

The fair values of subordinated debt are estimated using the rates that would be charged for subordinated debt of similar remaining maturities.

Loan Commitments and Letters of Credit

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

The estimated fair values of the Company’s financial instruments that are reported at amortized cost in the Company’s consolidated balance sheets, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value, are as follows:


	June 30,				December 31,
	2022				2021				June 30, 2023				December 31, 2022
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)								(Dollars in thousands)
FINANCIAL ASSETS
Level 2 inputs:
Cash and cash equivalents	$	3,879,341	$	3,879,341	$	2,050,022	$	2,050,022	$	2,409,142	$	2,409,142	$	3,168,910	$	3,168,910
Federal funds sold		1,525		1,525		800		800		4,481		4,481		2,850		2,850
Debt securities held for investment		21		22		32		33		8		8		13		13
Loans held for sale		7,360		7,360		24,776		24,776		8,783		8,783		6,232		6,232
Level 3 inputs:
Debt securities held for investment		2,370		2,370		2,945		2,945		1,185		1,185		2,370		2,370
Loans, net of allowance for credit losses		6,526,348		6,296,415		6,085,506		6,059,716		7,201,772		6,915,262		6,850,835		6,563,755
FINANCIAL LIABILITIES
Level 2 inputs:
Deposits		11,142,688		10,825,618		8,091,914		8,161,553		10,475,180		10,096,793		10,974,228		10,614,840
Short-term borrowings		6,100		6,100		—		—		3,893		3,893		300		300
Subordinated debt		86,015		85,100		85,987		90,391		86,072		79,834		86,044		82,385
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments				4,350				3,648				4,938				4,598
Letters of credit				509				621				530				542

Non-financial Assets and Non-financial Liabilities Measured at Fair Value

The Company has 0no non-financial assets or non-financial liabilities measured at fair value on a recurring basis. Certain non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis include intangible assets and other non-financial long-lived assets measured at fair value and adjusted for impairment. These items are evaluated at least annually for impairment. The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were 0not considered to be significant to the Company at June 30, ~~2022~~2023 or December 31, ~~2021.~~2022.

~~(12)~~(11) DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, to mitigate the exposure to fluctuations in oil and gas prices, the Company simultaneously enters into an offsetting contract with a counterparty. These derivatives are not designated as hedged instruments and are recorded on the Company's consolidated balance sheet at fair value and are included in other assets. The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices. ~~These margins have increased during~~At June 30, 2023, the Company had a margin liability included in other liabilities in the amount of $5.5 million. At December 31, 2022, ~~due to~~ the ~~current increase in oil and gas prices and customer activity. These margins are~~Company had a margin asset included in other assets ~~totaling~~in the amount of $~~98.7~~6.6 ~~million at June 30, 2022 and $~~million.~~14.3~~ ~~million at December 31, 2021.~~

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


		June 30, 2022						December 31, 2021							June 30, 2023						December 31, 2022
Oil and Gas Swaps and Options	Notional Units	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
Oil and Natural Gas Swaps and Options														Notional Units	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
		(Notional amounts and dollars in thousands)													(Notional amounts and dollars in thousands)
Oil
Derivative assets	Barrels		3,599		$	40,214			2,585		$	6,563		Barrels		2,416		$	11,057			2,698		$	8,868
Derivative liabilities	Barrels		(3,599	)		(39,506	)		(2,585	)		(6,129	)	Barrels		(2,416	)		(10,460	)		(2,698	)		(8,259	)

Gas/Natural Gas Liquids
Derivative assets	MMBTUs/Gallons		34,990			14,960			19,752			2,383		MMBTUs/Gallons		53,649			12,283			25,059			11,877
Derivative liabilities	MMBTUs/Gallons		(34,990	)		(14,437	)		(19,752	)		(2,108	)	MMBTUs/Gallons		(53,649	)		(11,353	)		(25,059	)		(11,424	)

Total Fair Value	Included in													Included in
Derivative assets	Other assets					55,174						8,946		Other assets					23,340						20,745
Derivative liabilities	Other liabilities					(53,943	)					(8,237	)	Other liabilities					(21,813	)					(19,683	)

The following table is a summary of the Company's recognized income related to the activity, which was included in other noninterest income:

Three Months Ended
June 30,

Six Months Ended June 30,

2022

2021

2022

2021

(Dollars in thousands)

(Dollars in thousands)

Derivative income
$
189

$
37

$
348

$
39


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(Dollars in thousands)				(Dollars in thousands)
Derivative income	$	260	$	189	$	349	$	348

The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by the market price movements. The Company's share of total profit is approximately 35%.

Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor's) and monitoring market information.

The following table is a summary of the Company's net credit exposure relating to oil and gas swaps and options with bank ~~counterparties was~~ 0 ~~as of both June 30, 2022 and December 31, 2021.~~counterparties:


	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Credit exposure	$	21,093	$	6,560

Balance Sheet Offsetting

Derivatives may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with upstream financial institution counterparties and bank customers are generally executed under International Swaps and Derivative Association ("ISDA") master agreements, which include "right of set-off" provisions. In such cases

there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset such financial instruments for financial reporting purposes.

~~(13)~~(12) SEGMENT INFORMATION

The Company evaluates its performance with an internal profitability measurement system that measures the profitability of its business units on a pre-tax basis. The 6six principal business units are BancFirst metropolitan banks, BancFirst community banks, Pegasus, Worthington, other financial services and executive, operations and support. ~~Metropolitan~~BancFirst metropolitan banks, BancFirst community banks, Pegasus and Worthington offer traditional banking products such as commercial and retail lending and a full line of deposit accounts. ~~Metropolitan~~BancFirst metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. ~~Community~~BancFirst community banks consist of banking locations in communities ~~throughout Oklahoma.~~in Oklahoma outside the Oklahoma City and Tulsa metropolitan areas. Pegasus consists of banking locations in the Dallas metropolitan area. Worthington consists of banking locations in the Dallas and Fort Worth metropolitan ~~area.~~areas. Other financial services are specialty product business units including guaranteed small business lending, residential mortgage lending, trust services, securities brokerage, electronic banking and insurance. The executive, operations and support groups represent executive management, operational support and corporate functions that are not allocated to the other business units.

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


		Metropolitan Banks		Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated			BancFirst Metropolitan Banks		BancFirst Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated
																					(Dollars in thousands)
Three Months Ended June 30, 2023																				Three Months Ended June 30, 2023
Net interest income																					$	29,269	$	57,617	$	13,509	$	4,123	$	1,058	$	350		$	—		$	105,926
Noninterest income																						7,090		19,986		467		255		12,350		63,688			(55,862	)		47,974
Income before taxes																						21,588		43,184		9,857		791		4,298		45,925			(55,677	)		69,966
		(Dollars in thousands)
Three Months Ended June 30, 2022	Three Months Ended June 30, 2022																			Three Months Ended June 30, 2022
Net interest income		$	21,962	$	49,615	$	9,964	$	3,743	$	2,079	$	(505	)	$	9		$	86,867		$	21,962	$	49,615	$	9,964	$	3,743	$	2,079	$	(505	)	$	9		$	86,867
Noninterest income			5,504		18,152		293		286		10,753		52,756			(45,146	)		42,598			5,504		18,152		293		286		10,753		52,756			(45,146	)		42,598
Income before taxes			15,142		36,462		4,672		1,436		4,643		37,901			(45,009	)		55,247			15,142		36,462		4,672		1,436		4,643		37,901			(45,009	)		55,247

Three Months Ended June 30, 2021
Six Months Ended June 30, 2023																				Six Months Ended June 30, 2023
Net interest income		$	19,848	$	45,024	$	5,808	$	—	$	11,457	$	9		$	217		$	82,363		$	60,008	$	115,302	$	28,660	$	8,747	$	2,000	$	365		$	—		$	215,082
Noninterest income			3,669		16,197		355		—		10,913		62,025			(48,541	)		44,618			13,177		39,518		681		534		26,522		129,831			(114,461	)		95,802
Income before taxes			17,602		36,514		1,947		—		5,220		49,790			(48,166	)		62,907			44,898		86,783		19,501		2,421		10,462		94,342			(114,096	)		144,311

Six Months Ended June 30, 2022	Six Months Ended June 30, 2022																			Six Months Ended June 30, 2022
Net interest income		$	41,570	$	94,183	$	17,584	$	5,437	$	4,992	$	(1,412	)	$	20		$	162,374		$	41,570	$	94,183	$	17,584	$	5,437	$	4,992	$	(1,412	)	$	20		$	162,374
Noninterest income			15,277		34,997		484		419		23,736		95,330			(83,995	)	$	86,248			15,277		34,997		484		419		23,736		95,330			(83,995	)		86,248
Income before taxes			33,313		67,801		7,499		1,821		10,688		61,549			(83,715	)	$	98,956			33,313		67,801		7,499		1,821		10,688		61,549			(83,715	)		98,956

Six Months Ended June 30, 2021
Net interest income		$	39,181	$	87,794	$	11,167	$	—	$	21,339	$	(398	)	$	486		$	159,569
Noninterest income			8,813		31,173		739		—		22,488		111,756			(90,416	)	$	84,553
Income before taxes			31,526		66,283		3,592		—		11,171		92,130			(89,617	)	$	115,085

Total Assets:
June 30, 2022		$	3,430,347	$	6,899,994	$	1,424,086	$	540,608	$	108,723	$	1,574,991		$	(1,448,676	)	$	12,530,073
December 31, 2021			2,627,874		5,821,220		1,045,699		—		71,694		1,201,974			(1,362,849	)		9,405,612
June 30, 2023																					$	3,436,504	$	6,810,321	$	1,276,354	$	542,292	$	241,921	$	1,217,957		$	(1,505,084	)	$	12,020,265
December 31, 2022																						3,412,369		6,886,066		1,404,033		541,002		171,679		1,473,443			(1,500,729	)		12,387,863

The financial information for each business unit is presented on the basis used internally by management to evaluate performance and allocate resources. The Company utilizes a transfer pricing system to allocate the benefit or cost of funds provided or used by the various business units. Certain services provided by the support group to other business units, such as item processing, are allocated at rates approximating the cost of providing the services. Eliminations are adjustments to consolidate the business units and companies.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 and results of operations for the three and six months ended June 30, ~~2022~~2023 should be read in conjunction with our consolidated financial statements and notes to the consolidatedfinancial statements for the year ended December 31, ~~2021,~~2022, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the ~~2021~~2022 Form 10-K, and "Item 1A, Risk Factors" in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis.

The Company may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 with respect to earnings, credit quality, corporate objectives, interest rates and other financial and business matters. Forward-looking statements include estimates and give management’s current expectations or forecasts of future events. The Company cautions readers that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, including economic conditions; the performance of financial markets and interest rates; legislative and regulatory actions and reforms; competition; as well as other factors, all of which change over time. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes”, “anticipates”, “expects”, “intends”, “targeted”, “continue”, “remain”, “will”, “should”, “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

The Company’s net income for the second quarter of ~~2022~~2023 was ~~$44.7~~$55.0 million, compared to ~~$48.2~~$44.7 million for the second quarter of ~~2021.~~2022. Diluted net income per common share was ~~$1.34~~$1.64 and ~~$1.45~~$1.34 for the second quarter of 2023 and 2022, ~~and 2021,~~ respectively.

The Company’s net interest income for the second quarter of ~~2022~~2023 increased to ~~$86.9~~$105.9 million, compared to ~~$82.4~~$86.9 million for the second quarter of ~~2021.~~2022. Rising ~~short term~~short-term interest rates ~~contributed to~~and loan growth drove the increase. The net interest margin for the second quarter was ~~3.05% and 3.32% or the second quarter of 2021. The margin for the second quarter of 2021 was positively impacted by higher PPP fees, which were $11.9 million~~3.87%, compared to ~~approximately $400,000 for the current quarter.~~

3.05% a year ago. For the second quarter of ~~2022~~2023, the Company recorded a provision for credit losses of ~~$501,000~~$2.8 million, compared to a ~~net benefit from reversal of provisions of $9.9 million for the quarter ended June 30, 2021. Provisions~~provision for credit losses ~~have stabilized in 2022 after~~of $501,000 for the ~~economic downturn and recovery from the effects~~second quarter of ~~the COVID pandemic in prior years.~~2022.

Noninterest income for the second quarter of ~~2022~~2023 totaled ~~$42.6~~$48.0 million, ~~down from $44.6~~compared to $42.6 million for the second quarter of ~~2021.~~2022. The ~~decrease~~growth in noninterest income ~~in 2022~~ was ~~due~~mostly attributable to ~~a purchase gain of $6.0 million that was included in~~increased sweep account balances. Noninterest income for the second quarter of ~~2021 related~~2022 included $578,000 of income from an equity interest received from a prior loan settlement. The equity interest was sold during the second quarter of 2023 at no gain. The Company exceeded $10 billion in total assets at December 31, 2022. Pursuant to the ~~purchase and assumption transaction with The First National Bank and Trust Company~~Durbin Amendment of ~~Vinita, Oklahoma.~~ the Dodd-Frank Act, based on current run rates, this will cause a reduction of annual pretax income from debit card interchange fees of approximately $23 million beginning July 1, 2023.

Noninterest expense for the second quarter of ~~2022 was relatively flat at~~2023 increased to $81.1 million compared to $73.7 million ~~but included~~for the second quarter of 2022. Higher noninterest expense was primarily related to an increase in salaries and employee benefits of $4.5 million. In addition, noninterest expense was lower in the second quarter of 2022 due to a gain ~~of $3.1 million~~ from ~~the~~ sale of the ~~Company’s~~Company's prior headquarters that was ~~carried in other real estate owned, as well as a write down of an equity investment of $1.5 million.~~netted against expenses.

The Company’s effective tax rate was 21.4% for the second quarter of 2023 compared to 19.1% for the second quarter of ~~2022 compared~~2022. The Company adopted Accounting Standard Update ("ASU") 2023-02 on January 1, 2023, which increased income tax expenses. Exercises of stock options contributed to ~~23.4% for~~ the ~~second quarter of 2021. The~~ lower effective tax rate ~~was driven by the exercise of stock options during the quarter that produced higher tax deductions for compensation, and a lower state income tax rate.~~in 2022.

At June 30, ~~2022,~~2023, the Company’s total assets were ~~$12.5~~$12.0 billion, ~~compared to $9.4 billion at~~a decrease of $367.6 million from December 31, ~~2021. Deposits~~2022. Debt securities of $1.6 billion were up $30.0 million from December 31, 2022. Loans totaled ~~$11.1~~$7.3 billion, an increase of ~~$3.1 billion~~$357.7 million from December 31, ~~2021. The consolidated~~2022. Deposits totaled $10.5 billion, a decrease of $499.0 million from December 31, 2022 as deposits generally flowed from demand deposits into the Company's off balance sheet ~~growth was driven by the return of customer deposits from off-balance sheet~~ sweep account product. Sweep accounts ~~continued deposit growth and the acquisition of Worthington National Bank. Loans~~ totaled ~~$6.6 billion compared to $6.2~~$4.3 billion at June 30, 2023 up $567.7 million from December 31, ~~2021. Loan growth during the first two quarters of 2022, net of acquired loans and PPP loans, was $247 million, or 4%.~~2022. The Company’s total stockholders’ equity at June 30, 2023 was ~~$1.2~~$1.3 billion, an increase of ~~$14.0~~$90.0 million over December 31, ~~2021.~~2022.

~~Asset quality remained strong as~~At June 30, 2023, the Company’s nonaccrual loans ~~continued~~were $18.0 million compared to ~~decline, totaling $13.7~~$15.3 million ~~which~~at year-end 2022. Nonaccrual loans represented ~~0.21%~~0.25% of total loans at June 30, ~~2022, down from 0.34%~~2023, compared to 0.22% at ~~year-end 2021.~~December 31, 2022. The allowance for credit losses to total loans ~~stood~~was 1.33% at ~~1.31%~~both June 30, 2023 and December 31, 2022. Net charge-offs were 0.01% of average loans for the second quarter and year-to-date of both 2023 and 2022.

Competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and off balance sheet sweep account products. Although the percent of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets has decreased to 20.1% at June, ~~30,~~30. 2023, compared to 25.6% at December 31, 2022, ~~down from 1.36% at~~ the ~~end~~Company is still highly liquid. The Company expects its net interest income to decrease for the last half of ~~2021.~~2023 due to the decrease and change in mix of its deposits.

See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.

See Note (1) of the Notes to the Consolidated Financial Statements for ~~changes in the Company’s~~ disclosures regarding recently issued accounting pronouncements since December 31, ~~2021,~~2022, the date of its most recent annual report to stockholders.

See Note ~~(13)~~(12) of the Notes to the Consolidated Financial Statements for disclosures regarding business segments.

The following ~~tables present,~~table presents, for the periods indicated, certain information related to the Company's consolidated average balance ~~sheet,~~sheets, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were ~~$6.3~~$5.7 million for the three months ended June 30, ~~2022~~2023 compared to ~~approximately $17.4~~$6.3 million for the three months ended June 30, ~~2021.~~2022. Loan fees included in interest income were $11.3 million for the six months ended June 30, 2023 compared to $13.7 million for the six months ended June 30, ~~2022 compared to $31.4 million for the six months ended June 30, 2021.~~2022.


BANCFIRST CORPORATION	BANCFIRST CORPORATION																	BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS	CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS																	CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)	(Unaudited)																	(Unaudited)
Taxable Equivalent Basis	Taxable Equivalent Basis																	Taxable Equivalent Basis
(Dollars in thousands)	(Dollars in thousands)																	(Dollars in thousands)

		Six Months Ended June 30,																	Six Months Ended June 30,
		2022								2021									2023								2022
					Interest		Average						Interest		Average							Interest		Average						Interest		Average
		Average			Income/		Yield/			Average			Income/		Yield/				Average			Income/		Yield/			Average			Income/		Yield/
		Balance			Expense		Rate			Balance			Expense		Rate				Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans(1)		$	6,463,687		$	151,902		4.74	%	$	6,350,354		$	160,363		5.09	%		$	7,127,174		$	219,189		6.20	%	$	6,463,687		$	151,902		4.74	%
Debt securities – taxable			1,149,037			8,923		1.57			528,272			3,295		1.26				1,588,439			18,399		2.34			1,149,037			8,923		1.57
Debt securities – tax exempt			4,225			62		2.95			17,187			177		2.08				3,366			38		2.29			4,225			62		2.95
Federal funds sold and interest-bearing deposits with banks			3,618,260			9,363		0.52			2,751,005			1,420		0.10				2,463,587			58,827		4.82			3,618,260			9,363		0.52
Total earning assets			11,235,209			170,250		3.06			9,646,818			165,255		3.45				11,182,566			296,453		5.35			11,235,209			170,250		3.06
Nonearning assets:
Cash and due from banks			280,304								271,523									209,115								280,304
Interest receivable and other assets			864,988								683,978									808,094								864,988
Allowance for credit losses			(86,337	)							(91,731	)								(94,609	)							(86,337	)
Total nonearning assets			1,058,955								863,770									922,600								1,058,955
Total assets		$	12,294,164							$	10,510,588								$	12,105,166							$	12,294,164
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY																	LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits		$	959,898		$	403		0.08	%	$	812,145		$	304		0.08	%		$	885,010		$	3,269		0.74	%	$	959,898		$	403		0.08	%
Savings deposits			4,249,720			3,874		0.18			3,598,589			2,045		0.11				4,440,577			68,158		3.10			4,249,720			3,874		0.18
Time deposits			659,907			1,290		0.39			657,704			1,976		0.61				726,558			7,482		2.08			659,907			1,290		0.39
Short-term borrowings			4,599			13		0.56			2,534			1		0.05				8,537			212		5.00			4,599			13		0.56
Subordinated debt			85,999			2,061		4.83			27,131			1,069		7.94				86,056			2,061		4.83			85,999			2,061		4.83
Total interest-bearing liabilities			5,960,123			7,641		0.26			5,098,103			5,395		0.21				6,146,738			81,182		2.66			5,960,123			7,641		0.26
Interest-free funds:
Noninterest-bearing deposits			5,053,996								4,270,391									4,561,214								5,053,996
Interest payable and other liabilities			97,146								44,713									94,817								97,146
Stockholders’ equity			1,182,899								1,097,381									1,302,397								1,182,899
Total interest free funds			6,334,041								5,412,485									5,958,428								6,334,041
Total liabilities and stockholders’ equity		$	12,294,164							$	10,510,588								$	12,105,166							$	12,294,164
Net interest income					$	162,609							$	159,860								$	215,271							$	162,609
Net interest spread								2.80	%							3.24	%								2.69	%							2.80	%
Effect of interest free funds								0.12	%							0.10	%								1.19	%							0.12	%
Net interest margin								2.92	%							3.34	%								3.88	%							2.92	%

Selected income statement data and other selected data for the comparable periods were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Income Statement Data
Net interest income	$	86,867		$	82,363		$	162,374		$	159,569		$	105,926		$	86,867		$	215,082		$	162,374
Provision for (benefit from) credit losses		501			(9,949	)		3,437			(9,949	)
Provision for credit losses														2,824			501			5,146			3,437
Securities transactions		—			172			(3,915	)		267			110			—			(103	)		(3,915	)
Total noninterest income		42,598			44,618			86,248			84,553			47,974			42,598			95,802			86,248
Salaries and employee benefits		45,284			41,992			89,216			81,569			49,803			45,284			99,055			89,216
Total noninterest expense		73,717			74,023			146,229			138,986			81,110			73,717			161,427			146,229
Net income		44,707			48,192			80,622			90,712			55,010			44,707			112,543			80,622
Per Common Share Data
Net income – basic	$	1.36		$	1.47		$	2.46		$	2.77		$	1.67		$	1.36		$	3.42		$	2.46
Net income – diluted		1.34			1.45			2.42			2.72			1.64			1.34			3.36			2.42
Cash dividends		0.36			0.34			0.72			0.68			0.40			0.36			0.80			0.72
Performance Data
Return on average assets		1.42	%		1.79	%		1.32	%		1.74	%		1.85	%		1.42	%		1.87	%		1.32	%
Return on average stockholders’ equity		15.14			17.42			13.74			16.67			16.59			15.14			17.43			13.74
Cash dividend payout ratio		26.47			23.13			29.27			24.55			23.95			26.47			23.39			29.27
Net interest spread		2.90			3.23			2.80			3.24			2.58			2.90			2.69			2.80
Net interest margin		3.05			3.32			2.92			3.34			3.87			3.05			3.88			2.92
Efficiency ratio		56.94			58.29			58.82			56.93			52.70			56.94			51.93			58.82
Net charge-offs to average loans		0.01			0.06			0.01			0.07			0.01			0.01			0.01			0.01

For the three months ended June 30, ~~2022,~~2023, net interest income, which is the Company’s principal source of operating revenue, increased ~~$4.5~~$19.1 million or ~~5.5%~~21.9% compared to the three months ended June 30, ~~2021. Rising short term~~2022. The increase was due to rising short-term interest rates ~~contributed to the increase along with net interest income related to the Worthington acquisition.~~and loan growth. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. As shown in the preceding table, the Company’s net interest margin for the second quarter of ~~2022 decreased~~2023 increased compared to the second quarter of ~~2021. The margin for the second quarter of 2021 was positively impacted by higher PPP fees, which were $11.9 million compared to approximately $400,000 for the current quarter.~~2022.

Net interest income for the six months ended June 30, ~~2022~~2023 increased ~~$2.8~~$52.7 million or ~~1.8%~~32.5% compared to the six months ended June 30, ~~2021.~~2022. Rising short term interest rates and loan growth contributed to the ~~increase along with net interest income related to the Worthington acquisition.~~increase. As shown in the preceding table, the Company’s net interest margin for the six months ended June 30, ~~2022 decreased~~2023 increased compared to the six months ended June 30, ~~2021. The margin for the six months ended June 30, 2021 was positively impacted by higher PPP fees, which were $21.7 million compared to approximately $2.1 million for the six months ended June 30,~~ 2022.

~~During 2021,~~In March of 2022, the Federal Reserve began raising the federal funds rate in an effort to reduce inflation and slow the economy. The Company’s net interest income and net interest margin ~~had been~~were impacted by the ~~decreases~~increases in interest rates stemming from the Federal Reserve's response to the COVID-19 pandemic. However, during 2022 the Federal Reserve began raising interest rates and the Company's expectation is that interest rates will continue to increase during the year.rates.

~~For the second quarter of 2022 the Company recorded a~~The provision for credit losses ~~of $501,000 compared to a net benefit from reversal of provisions of $9.9 million~~is presented in the preceding table. The increase in the provision for the ~~quarter~~three months ended June 30, ~~2021. The Company’s reversal of provision for the second quarter of 2021~~2023 compared to 2022 was based on improvements in economic conditions and the Company’s outlook for certain economic indicators. Provisions for credit losses have stabilized in 2022 after the economic downturn and recovery from the effects of the COVID pandemic in prior years.driven by loan growth. The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the ~~consolidated~~ balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change, which could affect the amount of future provisions for credit losses. Net loan charge-offs were $664,000 for the second quarter of 2023, compared to net loan charge-offs of $805,000 for the second quarter of ~~2022, compared to net loan charge-offs of $4.2 million for the second quarter of 2021.~~2022. The rate of net charge-offs to average ~~total~~ loans, as presented in the preceding table, continues to be at a low level.

~~For~~The increased provision for credit losses for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 ~~the Company recorded a provision for credit losses of $3.4 million, which~~ was ~~substantially related~~due to ~~acquired loans, compared to a net benefit from reversal of provisions of $9.9 million~~loan growth. Net loan charge-offs were $954,000 for the six months ended June 30, ~~2021. Net loan charge-offs were $516,000,~~2023, compared to ~~$4.7 million~~$516,000 for the same period of the prior year.

Noninterest income, as presented in the preceding table, ~~decreased~~grew by ~~$2.0~~$5.4 million for the second quarter of ~~2022~~2023 compared to the second quarter of ~~2021.~~2022. The ~~decrease~~growth in noninterest income was mostly attributable to an increase in ~~2022 was~~sweep account fees due to ~~a purchase gain of $6.0 million that was included in~~increased sweep account balances. Noninterest income for the second quarter of ~~2021. In addition,~~2022 included $578,000 of income from an equity interest received from a prior loan settlement. The equity interest was sold during the ~~Company earned $2.1 million on the sale of loans for~~ second quarter of 2021 compared to $1.3 million for second quarter of 2022. The income from sales of loans was higher in 2021 due to the increase in volume of mortgage loans originated because of record low mortgage rates. The Company expects the volume of mortgage loans originated to decrease as interest rates increase.2023 at no gain.

Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling ~~$6.1~~$6.6 million and ~~$5.6~~$6.1 million for the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This represents ~~14.3%~~13.8% and ~~12.6%~~14.3% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card interchange fees totaling ~~$12.5~~$12.4 million and ~~$11.9~~$12.5 million during the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This represents ~~29.3%~~25.9% and ~~26.6%~~29.3% of the Company’s noninterest income for the respective periods.

Noninterest income ~~increased~~grew by ~~$1.7~~$9.6 million for the six months ended June 30, ~~2022~~2023 compared to the six months ended June 30, ~~2021.~~2022. The ~~increase~~growth in noninterest income was mostly attributable to ~~$5.5~~an increase in sweep account fees of $8.3 million ~~of income resulting from the application of equity method accounting related~~due to ~~an equity interest received in the process of a loan collection,~~increased sweep account balances, along with ~~a $3.4 million~~an increase ~~in income from service charges on deposits and increases~~ in trust revenue and insurance ~~commissions and cash management. The increase in non-interest income was partially offset by~~commissions. In addition, the first six months of 2022 included a loss of $4.0 million on ~~bonds resulting from~~ the sale of $226 million of low yielding debt securities, which were subsequently reinvested inat higher yielding debt securities. ~~There was a $2.7 million gain on sale of other assets in~~Noninterest income for the ~~first~~ six months ended June 30, 2022 included $5.5 million of ~~2021,~~income from an equity interest received from a prior loan settlement compared to ~~$175,000~~$327,000 for ~~2022. In addition, there was an acquisition purchase gain of $6.0 million and a gain from the sale of the Company's Hugo, Oklahoma branch of $2.5 million in the first~~ six months ended June 30, 2023. The equity interest was sold during the second quarter of ~~2021.~~2023 at no gain. The Company earned ~~$4.1~~$1.4 million on the sale of loans for the six months ended June 30, ~~2021~~2023 compared to $2.9 million for the six months ended June 30, 2022.

Noninterest income included non-sufficient fund fees totaling ~~$12.6~~$13.1 million and ~~$11.1~~$12.6 million during the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This represents ~~14.7%~~13.7% and ~~13.2%~~14.7% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card interchange fees totaling ~~$24.1~~$24.4 million and ~~$22.5~~$24.1 million during the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. This represents ~~28.0%~~25.5% and ~~26.6%~~28.0% of the Company’s noninterest income for the respective periods. Government assistance funds that flowed into the market, including PPP loans and stimulus payments to households, increased both customer liquidity and interchange volume. This activity resulted in higher debit card interchange fees for the six months ending June 30, 2021.

The Company is subject to political pressures that could limit ~~its~~our ability to charge for ~~non-sufficient funds ("NSF")~~NSF and overdraft fees. As of April 1, 2022, the Company lowered the rates charged on NSF and overdraft fees. ~~To the extent that increased volume doesn’t overcome these rate changes, the~~The Company ~~could experience lower annual pretax income.~~

~~It is likely the Company will exceed~~exceeded $10 billion in total assets at December 31, 2022. Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this ~~would trigger an approximate~~will cause a reduction of annual pretax income from debit card interchange fees of ~~between $22 to $24~~approximately $23 million beginning July 1, 2023.

Noninterest expense, as presented in the preceding table, ~~was relatively flat~~increased by $7.4 million for second quarter of ~~2022~~2023 compared to the second quarter of ~~2021, but included~~2022. Higher noninterest expenses in 2023 was primarily related to growth in salaries and employee benefits of $4.5 million. In addition, noninterest expense was lower in the second quarter of 2022 due to a gain ~~of $3.1 million~~ from the sale of the Company’s prior headquarters that was carried in other real estate owned ~~as well as a write down of an equity investment of $1.5~~which reduced noninterest expense by $3.1 million.

For the six months ended June 30, ~~2022,~~2023, noninterest expense increased by ~~$7.2~~$15.2 million compared to the six months ended June 30, ~~2021. The increase in~~2022. Higher noninterest expenses in 2023 was ~~due~~primarily related to ~~the increase~~growth in salaries and employee benefits ~~and other expenses related to the Worthington acquisition.~~of $9.8 million. In addition, noninterest expense was lower in the six months ended June 30, 2022 ~~included~~due to a gain ~~of $3.1 million~~ from the sale of the Company’s prior headquarters that was carried in other real estate owned ~~as well as a write down of an equity investment of $1.5~~which reduced noninterest expense by $3.1 million. ~~The six months ended June 30, 2021 included approximately $4.0 million in acquisition related expenses.~~

The Company’s effective tax rate was 21.4% for the second quarter of 2023, compared to 19.1% for the second quarter of ~~2022, compared to 23.4% for~~2022. The Company's adoption of ASU 2023-02 in the ~~second~~first quarter of ~~2021.~~2023 increased income tax expense due to the amortization of $1.2 million of New Markets Tax Credits ("NMTC") to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 1.69%. The lower effective tax rate in 2022 was also driven by the exercising of stock options during the ~~second quarter of 2022 that provided higher tax deductions for compensation and a lower state income tax rate.~~quarter.

The Company’s effective tax rate ~~on income before taxes~~ was 22.0% for the first six months of 2023, compared to 18.5% for the first six months of ~~2022, compared to 21.2% for~~2022. The Company's adoption of ASU 2023-02 in the first ~~six months~~quarter of ~~2021.~~2023 increased income tax expense due to the amortization of $2.2 million of NMTC to income tax expense during the period that would have previously been recorded to other expense, which increased the effective tax rate by 1.50%. Exercises of stock options contributed to the lower effective tax rate in 2022.

The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.

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

The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks ~~increased~~decreased by ~~$1.8 billion,~~$758.1 million or ~~89.2%,~~23.9% to ~~$3.9~~$2.4 billion, from December 31, ~~2021~~2022 to June 30, ~~2022.~~2023. The ~~increase~~decrease was primarily ~~related~~due to the ~~return~~movement of demand deposits ~~from~~into the Company's off-balance sheet sweep account product and loan growth. Sweep accounts ~~related to the Company’s year-end sweep program, which was partially off-set by the purchase of higher yielding bonds described below.~~were $4.3 billion at June 30, 2023, up $567.7 million from December 31, 2022.

At June 30, ~~2022,~~2023, total debt securities increased ~~$671.4~~$30.0 million, or ~~125.6%~~1.9% compared to December 31, ~~2021.~~2022. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized loss on debt securities available for sale, before taxes, was ~~$60.9~~$93.0 million at June 30, ~~2022,~~2023, compared to a net unrealized ~~gain~~loss of ~~$2.8~~$93.7 million at December 31, ~~2021.~~2022. These unrealized losses ~~and gains~~ are included in the Company’s stockholders’ equity as accumulated other

comprehensive income, net of income tax, in the amounts of a loss of ~~$46.5~~$71.0 million at June 30, ~~2022~~2023 and a ~~gain~~loss of ~~$2.2~~$71.6 million at December 31, ~~2021.~~2022.

During the six months ended June 30, 2023, the Company purchased debt securities as shown in the consolidated statements of cash flow. The Company did not have any sales of debt securities during the six months ended June 30, 2023. During the six months ended June 30, 2022, the Company had a loss of $4.0 million on bonds resulting from the sale of $226 million of debt securities with an average yield of 0.16%, the proceeds of which ~~was~~were subsequently reinvested in $220 million of debt securities with an average yield of 1.86%. On January 10, 2022, the Company purchased United States Treasury Notes ~~with~~of $600 million par value atwith an average yield of 1.42% and an average maturity of 53 months.

See Note (3) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s Securities.

At June 30, ~~2022,~~2023, total loans increased ~~$426.4~~$357.7 million or ~~6.9%~~5.1% compared to December 31, ~~2021. Loan~~2022, as a result of internal loan growth. The increase of internal loan growth ~~during~~was 71% from the ~~first two quarters of 2022, net of acquired loans~~Company's Oklahoma subsidiary BancFirst and ~~PPP loans, was approximately $247 million, or 4%. At June 30, 2022,~~29% from the ~~balance of total PPP loans was $3.2 million, with no unamortized processing fees, compared to $80.4 million, net of unamortized processing fees of $2.0 million at December 31, 2021.~~Company's Texas subsidiaries Pegasus and Worthington.

See Note (4) of the Notes to Consolidated Financial Statements for disclosures regarding the Company’s loan portfolio segments.

The ~~increase~~allowance for credit losses to total loans was 1.33% at both June 30, 2023 and December 31, 2022. The overall credit quality of the Company's loan portfolio has remained strong. If unforeseen adverse changes occur in the national or local economy, or in the credit markets, it would be reasonable to expect that the allowance for credit ~~loss during 2022 was substantially related to the additional allowance for credit loss required for newly acquired loans. The decrease~~losses would increase in the allowance for credit loss during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit loss within the loan portfolio. This reduction was partially offset by additional allowance for credit loss required for newly acquired loans.future periods.

At June 30, 2022, nonperforming and restructured assets decreased $9.2 million to $59.9 million compared to December 31, 2021. The Company’s level of nonperforming and restructured assets has continued to be relatively low, equating to 0.48% of total assets at June 30, 2022 and 0.73% of total assets at December 31, 2021.Nonaccrual Loans

Nonaccrual loans totaled ~~$13.7~~$18.0 million at June 30, ~~2022,~~2023, compared to ~~$20.9~~$15.3 million at December 31, ~~2021. The Company’s nonaccrual loans decreased $7.2 million from December 31, 2021 due to resolutions of several loans.~~2022. The Company’s nonaccrual loans are primarily commercial real estate and ~~agricultural~~commercial non-real estate ~~and farmland.~~loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $718,000 for the six months ended June 30, 2023 and $653,000 for the six months ended June 30, ~~2022 and $1.2 million for the six months ended June 30, 2021.~~2022. Only a small amount of this interest is expected to be ultimately collected. Approximately ~~$2.2~~$6.6 million of nonaccrual loans were guaranteed by government agencies at June 30, ~~2022.~~

Restructured loans totaled $2.2 million at June 30, 2022 compared to $3.7 million at December 31, 2021. The Company charges interest on principal balances outstanding during deferral periods. As a result, the current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings whose terms were modified during the period were not considered to be material.2023.

The classification of a loan as ~~nonperforming~~nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although, in an economic downturn, the Company’s experience has been that the level of collections declines. The above normal risk associated with ~~nonperforming~~nonaccrual loans has been considered in the determination of the allowance for credit losses. ~~At June 30, 2022, the allowance for credit losses as a percentage of nonperforming and restructured loans was 420.84%, compared to 284.33%, at December 31, 2021.~~ The level of ~~nonperforming~~nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions. The allowance for credit losses as a percentage of nonaccrual loans is shown in the table above.

As of January 1, 2023, the Company adopted ASU No. 2022-02, which eliminates the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, requires that the Company evaluate, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. 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 modified loans was approximately $9.7 million during the period ended June 30, 2023.

Other real estate owned (OREO) and repossessed assets totaled ~~$39.2~~$41.6 million at June 30, ~~2022,~~2023, compared to ~~$39.6~~$36.9 million at December 31, ~~2021. Other real estate owned~~2022. The Company has spent $4.4 million on OREO tenant improvement during the six months ended June 30, 2023, which is the contributing factor to the increase. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. Other real estate owned included a commercial real estate property recorded at $29.7 million at June 30, 2022 and $29.5 million at December 31, 2021. The Company's rental income from OREO was $2.8 million for the three months ended June 30, 2022 compared to $2.2 million for the three months ended June 30, 2021. The Company's rental income from OREO was $5.6 million for the six months ended June 30, 2022 compared to $4.6 million for the six months ended June 30, 2021. In addition, the Company's OREO holding expense was $2.6 million for the three months ended June 30, 2022 compared to $3.1 million for the three months ended June 30, 2021. The Company's OREO holding expense was $5.1 million for the six months ended June 30,

~~2022 compared to $4.6 million for the six months ended June 30, 2021. Other real estate owned and repossessed assets~~These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to ~~other real estate owned~~OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to ~~other real estate owned.~~OREO. Decreases in values of properties subsequent to their classification as ~~other real estate owned~~OREO are charged to operating expense.

OREO included a commercial real estate property recorded at $32.9 million at June 30, 2023 and $29.4 million at December 31, 2022. 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 OREO 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.

The Company's total rental income and operating expenses from OREO are presented in the following table:

Identifiable intangible assets and goodwill totaled ~~$205.4~~$200.3 million and ~~$167.5~~$202.0 million at June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The increase in goodwill and intangible assets was due the acquisition of Worthington on February 8, 2022, which added $5.9 million of core deposit intangibles and $33.7 million of goodwill. See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s recent developments, including mergers and acquisitions.

Other assets includes the cash surrender value of key-man life insurance policies totaling ~~$81.6~~$83.4 million at June 30, ~~2022~~2023 and ~~$81.4~~$82.7 million at December 31, ~~2021.~~2022.

Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled ~~$55.2~~$23.3 million at June ~~31, 2022~~30, 2023 and ~~$8.9~~$20.7 million at December 31, ~~2021.~~2022. These derivative financial instruments have increased due to the increase in oil and gas prices and customer activity. They require a daily margin to be posted, which fluctuates with oil and gas ~~prices. The margins have increased during 2022 due to the current increase in oil and gas~~ prices and customer activity. ~~The margins are~~At June 30, 2023, the Company had a margin liability included in other liabilities in the amount of $5.5 million. At December 31, 2022, the Company had a margin asset included in other assets ~~totaling $98.7 million at June 30, 2022 and $14.3 million at December 31, 2021.~~in the amount of $6.6 million. See Note ~~(12)~~(11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.

Equity securities are reported in other assets on the consolidated balance sheet. The Company invests in equity securities without readily determinable fair values. These equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was ~~$10.2~~$15.2 million at June 30, ~~2022~~2023 and ~~$10.6~~$15.5 million at December 31, ~~2021.~~2022. The Company reviews its portfolio of equity securities for impairment at least quarterly.

The balance of other assets included equity interests of previous borrowers in the oil and gas industry that were received through bankruptcy proceedings, which totaled $21.4 million at December 31, 2022. This equity interest was sold during the second quarter of 2023 resulting in a zero balance at June 30, 2023. Under the equity method, the carrying value of a bank’s investment in an investee is originally recorded at cost but is adjusted periodically to record as income the bank’s proportionate share of the investee’s earnings or losses and decreased by the amount of cash dividends or similar distributions received from the investee.

During ~~2022,~~2023, there have not been any material changes in the Company’s low income housing tax credit ("LIHTC") investments and ~~new market tax credit~~NMTC investments, which are included in other assets on the Company’s consolidated balance sheet. The Company adopted ASU 2023-02 on January 1, 2023 and as of June 30, 2023 have recorded $26.7 million in other assets and other liabilities on the consolidated balance sheet for unfunded LIHTC commitments and have amortized $2.2 million of NMTC investments to income tax expense for the six months ended June 30, 2023 that would have previously been recorded to other expense. See Note (6) of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, for disclosures regarding these investments.

The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. Although the percent of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets has decreased to 20.1% at June, 30. 2023, compared to 25.6% at December 31, 2022, the Company is still highly liquid. The decrease was primarily due to the movement of demand deposits into the Company's off-balance sheet sweep account product and loan growth.

There have not been any other material changes from the liquidity and funding discussion included in Management’s Discussion and Analysis in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

At June 30, ~~2022,~~2023, deposits totaled ~~$11.1~~$10.5 billion, ~~an increase~~a decrease of ~~$3.1 billion or 37.7%~~$499.0 million from ~~the~~ December 31, ~~2021 total. The increase in~~2022 as demand deposits ~~was primarily related to~~moved into the ~~return of funds from off-balance~~Company's off balance sheet sweep ~~accounts related to the Company’s year-end sweep program.~~account product. The Company’s core deposits provide it with a stable, low-cost funding source. ~~Core~~The Company’s core deposits as a percentage of total deposits were ~~98.4%~~97.6% at June 30, ~~2022~~2023 and ~~98.2%~~98.1% at December 31, ~~2021.~~2022. Noninterest-bearing deposits to total deposits were ~~46.9%~~40.9% at June 30, ~~2022,~~2023, compared to ~~46.7%~~45.1% at December 31, ~~2021.~~2022. Competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and off balance sheet sweep account products.

Off-balance sheet sweep accounts totaled ~~$2.9~~$4.3 billion at June 30, ~~2022~~2023 compared to ~~$5.1~~$3.7 billion at December 31, ~~2021, which included a temporary~~2022. The Company's sweep ~~amount~~accounts affected the balances of ~~$2.3 billion.~~both cash and deposits.

On June 17, 2021, the Company completed a private placement, under Regulation D of the Securities Act of 1933, of $60 million aggregate principal amount of 3.50% Fixed-to-Floating Rate Subordinated Notes due 2036 to various institutional accredited investors. See Note ~~(7)~~(6) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s subordinated debt.

Short-term borrowings, consisting primarily of federal funds purchased and repurchase agreements, are another source of funds for the Company. The level of these borrowings is determined by various factors, including customer demand and the Company’s ability to earn a favorable spread on the funds obtained. Short-term borrowings were ~~$6.1~~$3.9 million at June 30, 2023, compared to $300,000 at December 31, 2022. The Company ~~did not have short-term borrowings at December 31, 2021.~~

credit it can use. At June 30, 2023, BancFirst ~~has a~~had $769.6 million available on its line of credit from the ~~Federal Home Loan Bank (“FHLB”)~~FHLB of Topeka, Kansas ~~to use for liquidity or to match-fund certain long-term fixed-rate loans. In addition, BancFirst has~~and a $25.0 million line of credit with another financial institution that is an overnight federal funds facility. ~~As of June 30, 2022 and December 31, 2021, BancFirst had no advances outstanding under either line of credit. Pegasus~~Worthington has a $20.0 million line of credit with another financial institution that is an overnight federal funds facility. As of June 30, 2022 and December 31, 2021, Pegasus had no advances outstanding under its line of credit. Worthington has an $8.5$10.5 million line of credit with another financial institution that is an overnight federal funds facility, a federal reserve discount window capacity of $26.8 million and a $74.2 million line of credit from the FHLB of Dallas, ~~Texas to use for liquidity or to match-fund certain long-term fixed rate loans. Worthington had no advances outstanding as of June 30, 2022 under either line of credit.~~Texas.

Stockholders’ equity totaled ~~$1.2~~$1.3 billion at ~~both~~ June 30, ~~2022 and~~2023 an increase of $90.0 million from December 31, ~~2021.~~2022. In addition to net income of ~~$80.6~~$112.5 million, other changes in stockholders’ equity during the six months ended June 30, ~~2022~~2023 included ~~$4.6~~$2.0 million related to common stock issuances for stock option exercises, ~~and $918,000~~$1.2 million related to stock-based compensation and a $558,000 increase in accumulated other comprehensive income that were partially offset by ~~$23.6~~$26.3 million in ~~dividends and a $48.6 million decrease in accumulated other comprehensive income.~~dividends. The Company’s leverage ratio and total risk-based capital ratios at June 30, ~~2022~~2023, were well in excess of the regulatory requirements.

See Note ~~(9)~~(8) of the Notes to Consolidated Financial Statements for a discussion of capital ratios and requirements.

~~There~~Other than changes in the Company's liquidity elsewhere disclosed in this discussion, there have not been any material changes in the Company’s liquidity risk and off-balance sheet arrangements included in Management’s Discussion and Analysis which was included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

There have been no significant changes in the Company’s disclosures regarding market risk since December 31, ~~2021,~~2022, the date of its most recent annual report to stockholders.

Evaluation of Disclosure Controls and Procedures. Pursuant to Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company’s Chief Executive Officer, Chief Financial Officer and its Disclosure Committee, which includes the Company’s Executive Chairman, Chief Risk Officer, Chief Internal Auditor, Chief Asset Quality Officer, Controller, General Counsel and Director of Financial Reporting, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on their evaluation they concluded that the disclosure controls and procedures of the Company are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms.

Changes in Internal Control Over Financial Reporting. During the period to which this report relates, there have not been any changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, such controls.

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

~~As of June 30, 2022, there have been no~~The following represents a material ~~changes from the~~change in our risk factors ~~previously~~from those disclosed in Part I ~~Item 1A, of~~– “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Recent negative developments in the banking industry could adversely affect our financial condition and results of operations.

The recent bank failures and related negative media attention have generated significant market trading volatility among publicly traded bank holding companies and, in particular, regional, as well as community banks like the Company. These developments have negatively impacted customer confidence in regional and community banks that are not considered too big to fail, which has prompted customers to move uninsured deposits to banks that are perceived as too big to fail. Further, competition for deposits has recently increased and available yields have similarly increased, causing non-interest bearing deposits to move to interest bearing deposits and sweeps. If such movement is permanent, it will reduce our net interest margin going forward. The financial impact on the Company of ongoing market volatility, continued inflation and rising interest rates will depend on future developments which are highly uncertain and difficult to predict.

** This exhibit is furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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


100 N. Broadway Ave., Oklahoma City, Oklahoma		73102-8405
(Address of principal executive offices)		(Zip Code)


	Term Loans Amortized Cost Basis by Origination Year
	2022		2021		2020		2019		2018		Prior		Revolving Loans Amortized Cost Basis		Total
	(Dollars in thousands)
As of June 30, 2022
Commercial real estate owner occupied
Grade 1	$	98,837	$	153,898	$	119,189	$	98,981	$	49,907	$	138,353	$	47,977	$	707,142
Grade 2		25,774		33,972		32,759		21,243		10,083		33,359		23,049		180,239
Grade 3		—		42		452		936		341		1,606		212		3,589
Grade 4		—		303		—		851		193		520		307		2,174
Total commercial real estate owner occupied		124,611		188,215		152,400		122,011		60,524		173,838		71,545		893,144
Commercial real estate non-owner occupied
Grade 1		86,546		238,973		183,794		112,077		38,979		104,280		28,735		793,384
Grade 2		58,327		54,276		45,985		49,899		32,181		86,252		29,344		356,264
Grade 3		6,996		—		—		3,158		93		2,814		—		13,061
Grade 4		—		—		—		—		203		—		—		203
Total commercial real estate non-owner occupied		151,869		293,249		229,779		165,134		71,456		193,346		58,079		1,162,912
Construction and development < 60 months
Grade 1		60,042		136,104		42,114		37,833		3,629		5,887		40,046		325,655
Grade 2		18,223		28,205		1,799		14,816		1,733		1,277		43,436		109,489
Grade 3		1,198		—		103		—		—		2		111		1,414
Grade 4		—		—		33		52		—		15		—		100
Total construction and development < 60 months		79,463		164,309		44,049		52,701		5,362		7,181		83,593		436,658
Construction residential real estate < 60 months
Grade 1		119,503		94,469		3,821		26		—		44		31,831		249,694
Grade 2		18,089		14,076		347		—		—		413		1,855		34,780
Grade 3		513		—		—		—		—		—		—		513
Grade 4		—		103		—		—		—		—		—		103
Total construction residential real estate < 60 months		138,105		108,648		4,168		26		—		457		33,686		285,090
Residential real estate first lien
Grade 1		181,536		234,262		162,322		94,607		61,203		157,490		6,396		897,816
Grade 2		23,461		39,031		25,983		14,136		12,264		44,323		—		159,198
Grade 3		1,521		1,492		1,050		1,701		1,826		3,800		—		11,390
Grade 4		—		199		184		525		987		2,265		—		4,160
Total residential real estate first lien		206,518		274,984		189,539		110,969		76,280		207,878		6,396		1,072,564
Residential real estate all other
Grade 1		16,908		13,021		12,762		6,836		4,343		13,031		33,925		100,826
Grade 2		1,990		1,849		1,944		1,761		1,206		2,820		58,388		69,958
Grade 3		185		211		91		67		243		890		589		2,276
Grade 4		—		31		177		—		38		218		390		854
Total residential real estate all other		19,083		15,112		14,974		8,664		5,830		16,959		93,292		173,914
Farmland
Grade 1		26,555		40,429		32,947		21,399		11,001		32,232		6,702		171,265
Grade 2		8,434		16,653		7,470		13,116		6,084		17,368		12,121		81,246
Grade 3		2,267		1,954		1,862		1,778		70		2,409		1,923		12,263
Grade 4		—		1,125		379		—		58		222		232		2,016
Total farmland		37,256		60,161		42,658		36,293		17,213		52,231		20,978		266,790
Commercial and agricultural non-real estate
Grade 1		160,548		271,247		100,081		71,623		22,808		71,498		337,631		1,035,436
Grade 2		46,899		69,950		28,657		17,177		26,250		7,737		145,827		342,497
Grade 3		2,368		2,451		2,144		1,219		1,937		806		7,019		17,944
Grade 4		—		679		234		907		499		1,237		269		3,825
Total commercial and agricultural non-real estate		209,815		344,327		131,116		90,926		51,494		81,278		490,746		1,399,702
Consumer non-real estate
Grade 1		112,598		141,806		55,814		30,229		10,829		3,970		35,949		391,195
Grade 2		13,357		14,002		5,298		4,529		1,395		2,042		5,233		45,856
Grade 3		296		767		405		294		127		97		2		1,988
Grade 4		64		286		87		182		64		1		—		684
Total consumer non-real estate		126,315		156,861		61,604		35,234		12,415		6,110		41,184		439,723
Oil and gas
Grade 1		115,020		101,947		18,040		4,468		1,798		326		152,151		393,750
Grade 2		9,301		5,414		3,681		13,581		17,777		250		30,898		80,902
Grade 3		45		4,733		8		—		—		199		2,080		7,065
Grade 4		—		1,000		—		—		—		—		69		1,069
Total oil and gas		124,366		113,094		21,729		18,049		19,575		775		185,198		482,786
Total loans held for investment	$	1,217,401	$	1,718,960	$	892,016	$	640,007	$	320,149	$	740,053	$	1,084,697	$	6,613,283


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐


Item		PART I – Financial Information	Page	PART I – Financial Information	Page
1.		Financial Statements (Unaudited)	2	Financial Statements (Unaudited)	2
		Consolidated Balance Sheets	2	Consolidated Balance Sheets	2
		Consolidated Statements of Comprehensive Income	3	Consolidated Statements of Comprehensive Income	3
		Consolidated Statements of Shareholders’ Equity	4	Consolidated Statements of Shareholders’ Equity	4
		Consolidated Statements of Cash Flow	5	Consolidated Statements of Cash Flow	5

		Notes to Consolidated Financial Statements	6	Notes to Consolidated Financial Statements	6
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	30	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
3.		Quantitative and Qualitative Disclosure About Market Risk	40	Quantitative and Qualitative Disclosure About Market Risk	40
4.		Controls and Procedures	40	Controls and Procedures	40

		PART II – Other Information		PART II – Other Information
1.		Legal Proceedings	41	Legal Proceedings	41
1A.		Risk Factors	41	Risk Factors	41
2.		Unregistered Sales of Equity Securities	41	Unregistered Sales of Equity Securities	41
3.		Defaults Upon Senior Securities	41	Defaults Upon Senior Securities	41
4.		Mine Safety Disclosures	41	Mine Safety Disclosures	41
5.		Other Information	41	Other Information	41
6.		Exhibits	42	Exhibits	42
Signatures	Signatures		44	Signatures	43




	Metropolitan Banks		Community Banks		Pegasus		Worthington		Other Financial Services		Executive, Operations & Support		Consolidated
	(Dollars in thousands)
Six months ended June 30, 2022
Balance at beginning of period	$	13,767	$	61,212	$	68,855	$	0	$	5,464	$	624	$	149,922
Acquisitions		—		—		—		33,717		—		—		33,717
Balance at end of period	$	13,767	$	61,212	$	68,855	$	33,717	$	5,464	$	624	$	183,639


	June 30, 2022
	(Dollars in thousands)
2022 (six months)	$	929
2023		1,565
2024		1,205
2025		989
2026		647
Thereafter		1,314
Total lease payments		6,649
Less imputed Interest		(1,483	)
Operating lease liability	$	5,166


BANCFIRST CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share data)


	June 30, 2023			December 31, 2022
	(unaudited)
Balance Sheet Data
Total assets	$	12,020,265		$	12,387,863
Total loans (net of unearned interest)		7,307,475			6,949,795
Allowance for credit losses		96,920			92,728
Debt securities		1,570,620			1,540,604
Deposits		10,475,180			10,974,228
Stockholders' equity		1,340,791			1,250,836
Book value per share		40.70			38.05
Tangible book value per share (non-GAAP)(1)		34.62			31.90
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)
Stockholders' equity	$	1,340,791		$	1,250,836
Less goodwill		182,055			182,055
Less intangible assets, net		18,223			19,983
Tangible stockholders' equity (non-GAAP)	$	1,140,513		$	1,048,798
Common shares outstanding		32,939,256			32,875,560
Tangible book value per share (non-GAAP)	$	34.62		$	31.90
Selected Financial Ratios
Balance Sheet Ratios:
Average loans to deposits (year-to-date)		67.15	%		60.06	%
Average earning assets to total assets (year-to-date)		92.38			91.63
Average stockholders’ equity to average assets (year-to-date)		10.76			9.67
Asset Quality Data
Loans past due 90 days and still accruing	$	8,799		$	7,085
Nonaccrual loans (3)		18,047			15,299
Other real estate owned and repossessed assets		41,612			36,936
Asset Quality Ratios:
Nonaccrual loans to total loans		0.25	%		0.22	%
Allowance for credit losses to total loans		1.33			1.33
Allowance for credit losses to nonaccrual loans		537.05			606.10
(1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table.
(2) Tangible book value per common share is stockholders’ equity less goodwill and intangible assets, net, divided by common shares outstanding. This amount is a non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate the financial condition and capital strength of the Company. This measure should not be considered a substitute for operating results determined in accordance with GAAP.
(3) Government agencies guarantee approximately $6.6 million of nonaccrual loans at June 30, 2023.


Exhibit Number		Exhibit


~~2.1~~		Share Exchange Agreement by and between BancFirst Corporation and Pegasus Bank dated April 23, 2019 (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K/A dated April 25, 2019 and incorporated herein by reference).
3.1		Amended and Restated By-Laws of BancFirst Corporation (filed as Exhibit 3.1 to the ~~Company’s Current~~Company's Quarterly Report on Form ~~8-K dated July 27, 2021~~10-Q for the Quarter Ended March 31, 2023 and incorporated herein by reference).

3.2		Restated Certificate of Incorporation of BancFirst Corporation dated August 5, ~~2021.~~2021 (filed as Exhibit 3.2 ~~to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2021).~~

~~4.1~~		~~Instruments defining the rights of securities holders (see Exhibits 3.1 and 3.2 above).~~
~~4.2~~		~~Description of Registrant’s Securities (filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference).~~
~~4.3~~		Form of Amended and Restated Trust Agreement relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

~~4.4~~		Form of 7.20% Cumulative Trust Preferred Security Certificate for BFC Capital Trust II (filed as Exhibit D to Exhibit 4.5 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

~~4.5~~		Form of Indenture relating to the 7.20% Junior Subordinated Deferrable Interest Debentures of BancFirst Corporation issued to BFC Capital Trust II (filed as Exhibit 4.1 to the Company’s registration statement on Form S-3, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).

~~4.6~~		Form of Certificate of 7.20% Junior Subordinated Deferrable Interest Debenture of BancFirst Corporation (filed as Exhibit 4.2 to the Company’s registration statement on Form S-3, File No. 333-112488 dated February 4, 2004, and incorporated herein by reference).

~~4.7~~		Form of Guarantee of BancFirst Corporation relating to the 7.20% Cumulative Trust Preferred Securities of BFC Capital Trust II (filed as Exhibit 4.7 to the Company’s registration statement on Form S-3/A, File No. 333-112488 dated February 23, 2004, and incorporated herein by reference).

~~10.1~~		Adoption Agreement for the BancFirst Corporation Thrift Plan adopted April 21, 2016 effective January 1, 2016. (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2016 and incorporated herein by reference).
~~10.2~~		~~Amendment Number One to the BancFirst Corporation Thrift Plan. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated February 26, 2018 and incorporated herein by reference).~~
~~10.3~~		~~2019 Amendment BancFirst Corporation Thrift Plan (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference).~~

~~10.4~~		~~2020 Amendment BancFirst Corporation Thrift Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form~~ ~~8-K for dated December 17, 2020 and incorporated herein by reference).~~

~~10.5~~		~~Amended and Restated BancFirst Corporation Directors’ Deferred Stock Compensation Plan. (filed as exhibit 10.12~~ to the Company's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2021 and incorporated herein by reference).

~~10.6~~10.1		~~Purchase and Sale Agreement and Escrow Instructions by and between Cotter Tower – Oklahoma L.P. and~~ BancFirst ~~Corporation.~~Corporation 2023 Restricted Stock Unit Plan (filed as Exhibit ~~10.1 to the Company’s Current Report on Form 8-K dated September 5, 2018 and incorporated herein by reference).~~
~~10.7~~		First Amendment to Purchase and Sale Agreement and Escrow Instructions by and between Cotter Tower – Oklahoma L.P. and BancFirst Corporation. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K dated September 5, 2018 and incorporated herein by reference).



~~10.8~~		~~Subordinated Note Purchase Agreement. (filed as exhibit~~ 10.1 to the Company's Current Report on Form 8-K dated ~~June 17, 2021~~May 25, 2023 and incorporated herein by reference).

10.9*		~~Amended and Restated BancFirst Corporation Stock Option Plan.~~

10.10*		~~Amended and Restated BancFirst Corporation Non-Employee Directors' Stock Option Plan.~~

10.11*		~~Bancfirst Corporation Employee Stock Ownership Plan Amendment to Implement Secure Act and Other Law Changes.~~

10.12*		~~Adoption Agreement for McAfee & Taft Professional Corporation Non-Standardized Employee Stock Ownership Pre-Approved Plan.~~

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

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

32**		CEO’s & CFO’s Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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		BANCFIRST CORPORATION
		(Registrant)

Date: August ~~5, 2022~~4, 2023		/s/ David Harlow
		David Harlow
		President
		Chief Executive Officer
		(Principal Executive Officer)

Date: August ~~5, 2022~~4, 2023		/s/ Kevin Lawrence
		Kevin Lawrence
		Executive Vice President
		Chief Financial Officer
		(Principal Financial Officer)