Loans Held for Investment and Allowance for Credit Losses on Loans | (5) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS In connection with our adoption of ASC 326 Loans held for investment are summarized by portfolio segment as follows: December 31, 2020 2019 Amount Amount (Dollars in thousands) BancFirst Real estate: Commercial real estate owner occupied $ 641,987 $ 621,188 Commercial real estate non-owner occupied 971,158 851,200 Construction and development < 60 months 229,615 287,138 Construction residential real estate < 60 months 206,195 189,480 Residential real estate first lien 853,316 834,849 Residential real estate all other 168,081 187,647 Farmland 252,958 246,988 Commercial and agricultural non-real estate 1,159,810 1,315,005 Consumer non-real estate 355,405 359,529 Oil and gas 179,355 184,399 Other loans (2) 822,078 154,015 Pegasus Bank 554,548 430,705 Total loans (1) $ 6,394,506 $ 5,662,143 (1) Excludes accrued interest receivable of $26.0 million at December 31, 2020 and $24.5 million at December 31, 2019, that is recorded in accrued interest receivable and other assets. (2) Includes PPP loans of $652.7 million, net of unamortized processing fees of $14.5 million at December 31, 2020. BancFirst’s loans are mostly to customers within Oklahoma and approximately 58% of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral. BancFirst’s commercial and agricultural non-real estate and oil and gas loan categories include upstream and midstream energy loans and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers. The balance of these upstream energy loans was approximately $191 million at December 31, 2020 and approximately $189 million at December 31, 2019. The balance of midstream energy loans was approximately $50 million at December 31, 2020 and approximately $41 million at December 31, 2019. The balance of the ancillary services energy loans was approximately $59 million at December 31, 2020 and approximately $90 million at December 31, 2019. Pegasus Bank’s loans are mostly to customers within Texas and approximately $272 million or 49% of the loans are secured by real estate at December 31, 2020. Pegasus Bank’s commercial and agricultural non-real estate loans were approximately $262 million at December 31, 2020, and approximately $172 million at December 31, 2019. Pegasus Bank’s commercial and agricultural non-real estate loan category includes upstream energy loans and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers. The balance of upstream energy loans was approximately $107 million at December 31, 2020 and approximately $57 million at December 31, 2019. The balance of midstream energy loans was approximately $11 million at December 31, 2020 and zero at December 31, 2019. The balance of the ancillary services energy loans was approximately $13 million at December 31, 2020 and approximately $7 million at December 31, 2019. As of December 31, 2020, the Company had $ million in PPP loans held for investment, net of unamortized processing fees of $ million. Through December 31, 2020, $ million of processing fees were recognized as interest income. Troubled Debt Restructurings, 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: December 31, 2020 2019 (Dollars in thousands) Troubled debt restructurings $ 7,784 $ 18,010 Other real estate owned and repossessed assets $ 32,480 $ 6,073 The Company charges interest on principal balances outstanding on troubled debt restructurings during deferral periods. The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material. During 2020, the Company sold property held in other real estate owned for a total gain of $2.4 million compared to gains of $1.4 million in 2019 and $23,500 in 2018. At December 31, 2020, the Company’s principal subsidiary bank, BancFirst, had approximately $21.6 million in loans at its Hugo, Oklahoma branch that it has entered into an agreement to sell to AmeriState Bank in Atoka, Oklahoma. Accordingly, as of December 31, 2020, the Company has transferred $21.6 million from loans held for investment (net of unearned interest) to loans held for sale. Nonaccrual loans Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $2.8 million in 2020, $1.7 million in 2019 and $2.3 million in 2018. Approximately $7.8 million of nonaccrual loans are guaranteed by government agencies as of December 31, 2020. The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment. December 31, 2020 (Dollars in thousands) BancFirst Real estate: Commercial real estate owner occupied $ 1,404 Commercial real estate non-owner occupied 4,719 Construction and development < 60 months 95 Construction residential real estate < 60 months — Residential real estate first lien 3,615 Residential real estate all other 1,362 Farmland 7,901 Commercial and agricultural non-real estate 12,782 Consumer non-real estate 268 Oil and gas — Other loans 5,399 Pegasus Bank — Total $ 37,545 December 31, 2019 (Dollars in thousands) BancFirst Real estate: Non-residential real estate owner occupied $ 2,275 Non-residential real estate other 1,815 Residential real estate permanent mortgage 1,206 Residential real estate other 3,060 Non-consumer non-real estate 2,915 Consumer other 264 Other loans 1,083 Acquired loans 4,496 Pegasus Bank 851 Total $ 17,965 Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of our loans held for investment: Age Analysis of Past Due Loans 30-59 Days Past Due 60-89 Days Past Due 90 Days and Greater Total Past Due Loans Current Loans Total Loans Accruing Loans 90 Days or More Past Due (Dollars in thousands) As of December 31, 2020 BancFirst Real estate: Commercial real estate owner occupied $ 1,096 $ 108 $ 1,164 $ 2,368 $ 639,619 $ 641,987 $ — Commercial real estate non-owner occupied 323 — 34 357 970,801 971,158 35 Construction and development < 60 months 511 86 — 597 229,018 229,615 — Construction residential real estate < 60 months 1,106 — 282 1,388 204,807 206,195 282 Residential real estate first lien 5,428 1,463 2,978 9,869 843,447 853,316 945 Residential real estate all other 520 55 1,606 2,181 165,900 168,081 384 Farmland 1,297 344 6,223 7,864 245,094 252,958 135 Commercial and agricultural non-real estate 2,788 1,794 4,345 8,927 1,150,883 1,159,810 465 Consumer non-real estate 2,154 501 534 3,189 352,216 355,405 386 Oil and gas — — — — 179,355 179,355 — Other loans 951 1,223 6,618 8,792 813,286 822,078 2,170 Pegasus Bank — — — — 554,548 554,548 — Total $ 16,174 $ 5,574 $ 23,784 $ 45,532 $ 6,348,974 $ 6,394,506 $ 4,802 As of December 31, 2019 BancFirst Real estate: Non-residential real estate owner occupied $ 1,600 $ 967 $ 5,159 $ 7,726 $ 699,690 $ 707,416 $ 3,799 Non-residential real estate other 971 — 1,228 2,199 1,134,976 1,137,175 — Residential real estate permanent mortgage 4,705 973 2,215 7,893 332,679 340,572 1,660 Residential real estate other 4,496 1,028 2,541 8,065 912,767 920,832 549 Non-consumer non-real estate 2,290 1,446 1,763 5,499 1,448,894 1,454,393 354 Consumer other 2,829 858 592 4,279 358,075 362,354 491 Other loans 1,670 8 4,613 6,291 147,724 154,015 4,426 Acquired loans 2,167 1,376 3,447 6,990 147,691 154,681 555 Pegasus Bank — — 851 851 429,854 430,705 — Total $ 20,728 $ 6,656 $ 22,409 $ 49,793 $ 5,612,350 $ 5,662,143 $ 11,834 Due to the impacts of the COVID-19 pandemic, the Company has approximately $81.7 million in modified loans, most of which are secured by commercial real estate, as of December 31, 2020. These modifications were undertaken in response to Section 4013 of the CARES Act and the regulatory intent outlined in the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus and to provide businesses financial flexibility until the economy has time to recover to a more normal level of activity. However, these modifications, which typically involve payment modifications and forbearance, also have the effect of delaying recognition of loans that may ultimately be permanently impaired. The timing and extent of such consequences are difficult to ascertain at this time and are dependent on the duration of the COVID-19 pandemic, the level and success of the government’s economic stimulus, and further regulatory guidance. These modified loans are included in current loans in the table above as of December 31, 2020. BancFirst Credit Quality Indicators The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions. The general characteristics of the risk grades are as follows: Grade 1 – Acceptable - Loans graded 1 represent reasonable and satisfactory credit risk which requires normal attention and supervision. Capacity to repay through primary and/or secondary sources is not questioned. Grade 2 – Acceptable - Increased Attention - This category consists of loans that have credit characteristics deserving management’s close attention. These complexities or potential weaknesses could result in deterioration of the repayment prospects for the loan or BancFirst’s credit position at some future date. Such credit characteristics include loans to highly leveraged borrowers in cyclical industries, adverse financial trends which could potentially weaken repayment capacity, loans that have fundamental structure complexity or deficiencies, loans lacking secondary sources of repayment where prudent, and loans with deficiencies in essential documentation, including financial information. Grade 3 – Loans with Problem Potential - This category consists of performing loans which are considered to exhibit problem potential. Loans in this category would generally include, but not be limited to, borrowers with a weakened financial condition or poor performance history, past dues, loans restructured to reduce payments to an amount that is below market standards and/or loans with severe documentation problems. In general, these loans have no identifiable loss potential in the near future, however; the possibility of a loss developing is heightened. Grade 4 - Problem Loans/Assets – Nonperforming - This category consists of nonperforming loans/assets which are considered to be problems. Nonperforming loans are described as being 90 days and over past due and still accruing, and loans that are nonaccrual. The government guaranteed portion of SBA loans is excluded. Grade 5 - Loss Potential - This category consists of loans/assets which are considered to possess loss potential. While the loss may not occur in the current year, management expects that loans/assets in this category will ultimately result in a loss, unless substantial improvement occurs. Grade 6 - Charge Off - This category consists of loans that are considered uncollectible and other assets with little or no value. Pegasus Bank Credit Quality Indicators Pegasus Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Pegasus Bank analyzes loans individually by classifying the loans as to credit risk. Pegasus Bank uses the following definitions for risk ratings: Pass – Loans classified as a pass are loans with low to average risk. These loans are included in grade 1 and 2 for the purposes for the following table: Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of Pegasus Bank’s credit position at some future date. These loans are included in grade 3 for the purposes of the following table: Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Pegasus Bank will sustain some loss if the deficiencies are not corrected. These loans are included in grade 4 for the purposes of the following table: Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. These loans, if any, would be included in grade 5 for the purposes of the following table: The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented. The following table summarizes our gross loans held for investment by year of origination and internally assigned credit grades: Term Loans Amortized Cost Basis by Origination Year 2020 2019 2018 2017 2016 Prior Revolving Loans Amortized Cost Basis Total (Dollars in thousands) As of December 31, 2020 BancFirst Commercial real estate owner occupied Grade 1 $ 142,574 $ 91,493 $ 73,845 $ 42,289 $ 37,097 $ 88,724 $ 17,153 $ 493,175 Grade 2 42,375 31,314 11,516 9,644 13,316 25,574 4,393 138,132 Grade 3 4,226 32 333 704 1,259 2,671 — 9,225 Grade 4 37 66 742 — 251 52 307 1,455 Total commercial real estate owner occupied loans 189,212 122,905 86,436 52,637 51,923 117,021 21,853 641,987 Commercial real estate non-owner occupied Grade 1 256,128 157,526 83,869 69,864 82,088 81,499 13,206 744,180 Grade 2 60,607 48,751 26,441 18,070 8,755 41,491 4,454 208,569 Grade 3 7,718 3,137 472 1,937 40 148 149 13,601 Grade 4 4,719 89 — — — — — 4,808 Total commercial real estate non-owner occupied loans 329,172 209,503 110,782 89,871 90,883 123,138 17,809 971,158 Construction and development < 60 months Grade 1 115,399 56,369 12,821 4,582 1,438 2,048 7,850 200,507 Grade 2 11,528 10,002 1,589 764 157 540 582 25,162 Grade 3 3,842 — 9 — — — — 3,851 Grade 4 — 64 9 22 — — — 95 Total construction and development < 60 months 130,769 66,435 14,428 5,368 1,595 2,588 8,432 229,615 Construction residential real estate < 60 months Grade 1 159,431 4,214 69 21 33 23 11,449 175,240 Grade 2 27,400 580 112 — — 468 390 28,950 Grade 3 1,885 120 — — — — — 2,005 Total construction residential real estate < 60 months 188,716 4,914 181 21 33 491 11,839 206,195 Residential real estate first lien Grade 1 241,771 134,184 80,793 64,392 48,686 136,059 — 705,885 Grade 2 28,305 19,425 21,742 11,666 12,365 34,312 — 127,815 Grade 3 2,754 2,029 1,375 2,073 1,213 5,194 — 14,638 Grade 4 730 733 478 210 1,186 1,590 — 4,927 Grade 5 — — — — 51 — — 51 Total residential real estate first lien 273,560 156,371 104,388 78,341 63,501 177,155 — 853,316 Residential real estate all other Grade 1 21,493 13,944 10,854 6,265 5,381 10,984 28,047 96,968 Grade 2 3,694 1,675 1,268 1,809 450 2,335 55,433 66,664 Grade 3 384 461 328 116 119 221 993 2,622 Grade 4 204 217 570 65 34 715 22 1,827 Total residential real estate all other 25,775 16,297 13,020 8,255 5,984 14,255 84,495 168,081 Farmland Grade 1 51,284 26,391 18,994 13,821 13,368 27,100 8,160 159,118 Grade 2 15,264 30,684 6,639 6,391 4,763 8,916 7,140 79,797 Grade 3 3,681 290 151 1,055 703 551 1,955 8,386 Grade 4 414 14 4,058 296 340 223 312 5,657 Total farmland 70,643 57,379 29,842 21,563 19,174 36,790 17,567 252,958 Commercial and agricultural non-real estate Grade 1 206,515 136,254 124,657 74,719 46,453 33,471 270,426 892,495 Grade 2 49,467 34,659 27,239 6,566 7,054 22,710 63,894 211,589 Grade 3 24,793 1,511 1,466 789 271 327 14,577 43,734 Grade 4 7,231 1,607 652 241 1,139 163 959 11,992 Total commercial and agricultural non-real estate 288,006 174,031 154,014 82,315 54,917 56,671 349,856 1,159,810 Consumer non-real estate Grade 1 166,934 93,232 41,449 13,157 4,471 1,768 7,673 328,684 Grade 2 12,773 5,902 3,399 796 499 266 328 23,963 Grade 3 445 840 450 175 75 63 2 2,050 Grade 4 89 287 144 94 47 40 7 708 Total consumer non-real estate 180,241 100,261 45,442 14,222 5,092 2,137 8,010 355,405 Oil and gas Grade 1 104,622 66 82 — — 4,679 16,529 125,978 Grade 2 42,713 745 — — — — 9,919 53,377 Total oil and gas 147,335 811 82 — — 4,679 26,448 179,355 Other loans Grade 1 685,426 32,392 25,707 20,638 16,378 10,341 22,976 813,858 Grade 2 — — 17 2,936 1,126 2,179 692 6,950 Grade 3 — — 78 — 53 67 36 234 Grade 4 — — — 124 208 33 671 1,036 Total other loans 685,426 32,392 25,802 23,698 17,765 12,620 24,375 822,078 Pegasus Bank Grade 1 100,631 66,875 27,235 19,025 12,414 44,237 113,824 384,241 Grade 2 28,187 26,733 6,774 23,367 3,822 5,300 74,671 168,854 Grade 3 123 — — — — 1,330 — 1,453 Total Pegasus Bank 128,941 93,608 34,009 42,392 16,236 50,867 188,495 554,548 Total loans held for investment $ 2,637,796 $ 1,034,907 $ 618,426 $ 418,683 $ 327,103 $ 598,412 $ 759,179 $ 6,394,506 The following table presents internal loan grading by class of loans as of December 31, 2019: Internal Loan Grading Grade 1 2 3 4 5 Total (Dollars in thousands) As of December 31, 2019 BancFirst Real estate: Non-residential real estate owner occupied $ 554,942 $ 130,783 $ 15,191 $ 6,500 $ — $ 707,416 Non-residential real estate other 861,108 252,134 23,048 868 17 1,137,175 Residential real estate permanent mortgage 289,350 41,754 6,975 2,442 51 340,572 Residential real estate other 722,983 179,951 14,382 3,446 70 920,832 Non-consumer non-real estate 1,166,155 261,003 25,276 1,959 — 1,454,393 Consumer other 335,916 23,407 2,327 704 — 362,354 Other loans 148,692 3,631 1,564 128 — 154,015 Acquired loans 88,205 55,087 6,800 4,446 143 154,681 Pegasus Bank 295,243 133,324 1,287 851 — 430,705 Total $ 4,462,594 $ 1,081,074 $ 96,850 $ 21,344 $ 281 $ 5,662,143 Allowance for Credit Losses Methodology On January 1, 2020, the Company adopted ASC 326, which replaces the incurred loss methodology for determining its provision for credit losses and allowance for credit losses with an expected loss methodology that is referred to as the CECL model. See Note (1) for additional information regarding the factors that influenced the Company’s current estimate of expected credit losses. Upon adoption, the allowance for credit losses was decreased by $3.2 million, with no impact to the consolidated statement of income. Subsequent to the adoption of ASC 326, the Company recorded a $62.6 million provision for credit losses for year ended December 31, 2020 utilizing the newly adopted CECL methodology, a significant increase from the year ended December 31, 2019. The increase resulted primarily from the anticipated impact on our loan portfolio resulting from the economic outlook related to the COVID-19 pandemic and the decline in energy prices and to a lesser degree, loan growth during 2020. Prolonged low energy prices will not only have a direct impact on the energy portfolio; it will have an indirect effect on the economies of Oklahoma and the Dallas, Texas market, including higher unemployment, with a residual effect on land values and real estate prices. The following table details activity in the allowance for credit losses on loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Allowance for Credit Losses Balance at beginning of period Impact of CECL adoption Initial allowance on loans purchased with credit deterioration Charge- offs Recoveries Net charge-offs Provision for credit losses on loans Balance at end of period (Dollars in thousands) Year ended December 31, 2020 BancFirst Real estate: Commercial real estate owner occupied $ 5,625 $ (2,806 ) $ 432 $ (773 ) $ 10 $ (763 ) $ 4,547 $ 7,035 Commercial real estate non-owner occupied 8,358 (5,507 ) — (3,609 ) — (3,609 ) 12,600 11,842 Construction and development < 60 months 2,214 (1,056 ) — (59 ) 123 64 1,338 2,560 Construction residential real estate < 60 months 1,933 (778 ) — (29 ) — (29 ) (499 ) 627 Residential real estate first lien 8,692 (3,831 ) 7 (465 ) 44 (421 ) (1,877 ) 2,570 Residential real estate all other 2,767 (1,408 ) — (126 ) 54 (72 ) 943 2,230 Farmland 2,821 (1,408 ) 1 (2,055 ) — (2,055 ) 3,777 3,136 Commercial and agricultural non-real estate 13,462 13,195 62 (3,320 ) 116 (3,204 ) 8,885 32,400 Consumer non-real estate 3,252 (622 ) — (1,142 ) 224 (918 ) 1,665 3,377 Oil and gas 1,883 (1,346 ) — (11,245 ) — (11,245 ) 28,559 17,851 Other loans 2,632 (116 ) — (168 ) 10 (158 ) 824 3,182 Pegasus Bank 599 2,488 — (841 ) 424 (417 ) 1,886 4,556 Total $ 54,238 $ (3,195 ) $ 502 $ (23,832 ) $ 1,005 $ (22,827 ) $ 62,648 $ 91,366 Year ended December 31, 2019 BancFirst Real estate: Non-residential real estate owner occupied $ 6,328 $ — $ — $ (34 ) $ 25 $ (9 ) $ 721 $ 7,040 Non-residential real estate other 11,027 — — (67 ) 42 (25 ) 155 11,157 Residential real estate permanent mortgage 3,261 — — (146 ) 22 (124 ) 250 3,387 Residential real estate other 10,673 — — (2,697 ) 30 (2,667 ) 2,143 10,149 Non-consumer non-real estate 13,151 — — (514 ) 272 (242 ) 2,432 15,341 Consumer other 3,065 — — (868 ) 218 (650 ) 904 3,319 Other loans 2,423 — — — 90 90 119 2,632 Acquired loans 1,461 — — (2,060 ) 219 (1,841 ) 994 614 Pegasus Bank — — — — 30 30 569 599 Total $ 51,389 $ — $ — $ (6,386 ) $ 948 $ (5,438 ) $ 8,287 $ 54,238 The following table details the amount of allowance for credit losses by class of loans for the period presented, on the basis of impairment methodology used by the Company. Allowance for Credit Losses December 31, 2019 Individually evaluated for impairment Collectively evaluated for impairment (Dollars in thousands) BancFirst Real estate: Non-residential real estate owner occupied $ 900 $ 6,140 Non-residential real estate other 990 10,167 Residential real estate permanent mortgage 531 2,856 Residential real estate other 2,026 8,123 Non-consumer non-real estate 2,902 12,439 Consumer other 343 2,976 Other loans 13 2,619 Acquired loans — 614 Pegasus Bank — 599 Total $ 7,705 $ 46,533 The following table details the loans outstanding by class of loans for the period presented, on the basis of the impairment methodology used by the Company Loans December 31, 2019 Individually evaluated for impairment Collectively evaluated for impairment Loans acquired with deteriorated credit quality (Dollars in thousands) BancFirst Real estate: Non-residential real estate owner occupied $ 21,690 $ 685,726 $ — Non-residential real estate other 23,933 1,113,242 — Residential real estate permanent mortgage 9,468 331,104 — Residential real estate other 17,898 902,934 — Non-consumer non-real estate 27,016 1,427,377 — Consumer other 3,090 359,264 — Other loans 231 153,784 — Acquired loans 10,470 143,351 860 Pegasus Bank — 428,567 2,138 Total $ 113,796 $ 5,545,349 $ 2,998 Purchased Credit Deteriorated Loans The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The purchased credit deteriorated loans for the period are as follows: Loans acquired with deteriorated credit quality (Dollars in thousands) For the year ended December 31, 2020 Purchase price of loans at acquisition $ 1,761 Allowance for credit losses at acquisition 502 Par value of acquired loans at acquisition $ 2,263 Collateral Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the year ended December 31, 2020, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows: Collateral Type Real Estate Business Assets Energy Reserves Other Assets Total Specific Allocation As of December 31, 2020 (Dollars in thousands) BancFirst Real estate: Commercial real estate owner occupied $ 848 $ — $ — $ — $ 848 $ 226 Commercial real estate non-owner occupied 4,719 — — — 4,719 1,000 Construction and development < 60 months — — — — — — Construction residential real estate < 60 months — — — — — — Residential real estate first lien 860 — — — 860 151 Residential real estate all other 866 — — — 866 616 Farmland 3,258 — — — 3,258 1,114 Commercial and agricultural non-real estate — 8,460 — 413 8,873 2,813 Consumer non-real estate — — — 109 109 58 Oil and gas — — — — — — Other loans — 13 — — 13 12 Pegasus Bank 1,257 — — — 1,257 222 Total collateral-dependent loans held for investment $ 11,808 $ 8,473 $ — $ 522 $ 20,803 $ 6,212 Impaired Loans Prior to the adoption of ASC 326, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect the full amount of scheduled principal and interest payments in accordance with the original contractual terms of the loan agreement. If a loan was impaired, a specific valuation allowance may be allocated, if necessary, so that the loan was reported, net of allowance for credit loss, at the present value of future cash flows using the loan’s existing rate, or the fair value of collateral if repayment was expected solely from the collateral. During the year ended December 31, 2019 no material amount of interest income was recognized on impaired loans subsequent to their classification as impaired. The following table presents impaired loans, segregated by class of loans. Impaired Loans Unpaid Principal Balance Recorded Investment with Allowance Related Allowance Average Recorded Investment (Dollars in thousands) As of December 31, 2019 BancFirst Real estate: Non-residential real estate owner occupied $ 13,253 $ 13,000 $ 514 $ 12,868 Non-residential real estate other 3,973 3,678 300 3,946 Residential real estate permanent mortgage 3,445 3,129 242 2,968 Residential real estate other 7,117 4,487 946 5,567 Non-consumer non-real estate 11,598 11,012 1,005 11,085 Consumer other 969 836 97 844 Other loans 5,711 5,510 105 1,130 Acquired loans 6,421 5,108 2 5,472 Pegasus Bank 2,960 2,138 — 2,161 Total $ 55,447 $ 48,898 $ 3,211 $ 46,041 Non-Cash Transfers from Loans and Premises and Equipment Transfers from loans and premises and equipment to other real estate owned, repossessed assets, and other assets are non-cash transactions, and are not included in the statements of cash flow. Transfers from loans and premises and equipment to other real estate owned, repossessed assets, and other assets during the periods presented are summarized as follows: Year ended December 31, 2020 2019 2018 (Dollars in thousands) Other real estate owned $ 32,093 $ 3,941 $ 5,437 Repossessed assets 1,418 1,473 1,122 Other assets 11,105 — — Total $ 44,616 $ 5,414 $ 6,559 Related Party Loans The Company has made loans in the ordinary course of business to the executive officers and directors of the Company and to certain affiliates of these executive officers and directors. Management believes that all such loans were made on substantially the same terms as those prevailing at the time for comparable transactions with other persons and do not represent more than a normal risk of collectability or present other unfavorable features. A summary of these loans is as follows: Year Ended December 31, Balance Beginning of the Period Additions Collections/ Terminations Balance End of the Period (Dollars in thousands) 2020 $ 20,281 $ 19,682 $ (17,906 ) $ 22,057 2019 19,891 12,371 (11,981 ) 20,281 2018 24,001 7,986 (12,096 ) 19,891 |