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 ~~October~~July 30, ~~2020~~2021 there were ~~32,682,269~~32,784,513 shares of the registrant’s Common Stock outstanding.

Item			Page			Page
		PART I – Financial Information			PART I – Financial Information
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	33		Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
3.		Quantitative and Qualitative Disclosure About Market Risk	42		Quantitative and Qualitative Disclosure About Market Risk	40
4.		Controls and Procedures	43		Controls and Procedures	40

		PART II – Other Information			PART II – Other Information
1.		Legal Proceedings	44		Legal Proceedings	41
1A.		Risk Factors	44		Risk Factors	41
2.		Unregistered Sales of Equity Securities	44		Unregistered Sales of Equity Securities	41
3.		Defaults Upon Senior Securities	44		Defaults Upon Senior Securities	41
4.		Mine Safety Disclosures	45		Mine Safety Disclosures	41
5.		Other Information	45		Other Information	41
6.		Exhibits	46		Exhibits	42
Signatures	Signatures		48	Signatures		44

	September 30,			December 31,			June 30,			December 31,
		2020			2019			2021			2020
	(unaudited)			(see Note 1)			(unaudited)			(see Note 1)
ASSETS
Cash and due from banks	$	226,062		$	222,043		$	268,299		$	280,518
Interest-bearing deposits with banks		1,609,462			1,646,238			3,373,099			1,336,394
Federal funds sold		—			1,000
Securities held for investment (fair value: $3,011 and $1,903, respectively)		2,971			1,903
Securities available for sale at fair value		593,970			489,723
Debt securities held for investment (fair value: $2,990 and $2,984, respectively)								2,988			2,964
Debt securities available for sale at fair value								560,783			552,232
Loans held for sale		48,601			11,001			16,032			53,719
Loans (net of unearned interest)		6,612,093			5,662,143
Loans held for investment (net of unearned interest)								6,191,230			6,394,506
Allowance for credit losses		(106,126	)		(54,238	)		(83,963	)		(91,366	)
Loans, net of allowance for credit losses		6,505,967			5,607,905			6,107,267			6,303,140
Premises and equipment, net		247,494			206,275			267,284			261,677
Other real estate owned		4,739			5,607			40,130			32,179
Intangible assets, net		19,914			22,608			19,283			18,999
Goodwill		149,922			148,604			149,922			149,922
Accrued interest receivable and other assets		209,766			202,851			210,200			220,613
Total assets	$	9,618,868		$	8,565,758		$	11,015,287		$	9,212,357

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	3,759,305		$	2,956,370		$	4,475,941		$	3,790,900
Interest-bearing		4,736,586			4,527,265			5,252,448			4,273,804
Total deposits		8,495,891			7,483,635			9,728,389			8,064,704
Short-term borrowings		300			1,100			3,100			1,100
Accrued interest payable and other liabilities		52,121			49,230			66,248			51,864
Junior subordinated debentures		26,804			26,804
Subordinated debt								85,959			26,804
Total liabilities		8,575,116			7,560,769			9,883,696			8,144,472

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: 32,679,191 and 32,694,268, respectively		32,679			32,694
Common stock, $1.00 par, 40,000,000 shares authorized; shares issued and outstanding: 32,784,513 and 32,719,852, respectively								32,785			32,720
Capital surplus		155,431			153,353			158,322			156,574
Retained earnings		846,934			815,488			935,067			871,161
Accumulated other comprehensive income, net of income tax of $2,943 and $1,187, respectively		8,708			3,454
Accumulated other comprehensive income, net of income tax of $1,705 and $2,513, respectively								5,417			7,430
Total stockholders' equity		1,043,752			1,004,989			1,131,591			1,067,885
Total liabilities and stockholders' equity	$	9,618,868		$	8,565,758		$	11,015,287		$	9,212,357

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
		2020			2019			2020			2019			2021			2020			2021			2020
INTEREST INCOME
Loans, including fees	$	76,612		$	75,260		$	231,985		$	214,980		$	82,447		$	78,855		$	160,109		$	155,373
Securities:
Taxable		2,032			2,361			6,665			10,551			1,602			2,047			3,295			4,633
Tax-exempt		131			103			383			347			70			154			140			252
Federal funds sold		—			1			—			3
Interest-bearing deposits with banks		422			8,704			5,586			24,587			825			395			1,420			5,164
Total interest income		79,197			86,429			244,619			250,468			84,944			81,451			164,964			165,422
INTEREST EXPENSE
Deposits		2,854			13,644			16,004			40,983			2,003			3,750			4,325			13,150
Short-term borrowings		—			7			8			29			—			1			1			8
Junior subordinated debentures		491			491			1,474			1,474
Subordinated debt														578			492			1,069			983
Total interest expense		3,345			14,142			17,486			42,486			2,581			4,243			5,395			14,141
Net interest income		75,852			72,287			227,133			207,982			82,363			77,208			159,569			151,281
Provision for credit losses		18,740			2,758			57,656			6,875
Net interest income after provision for credit losses		57,112			69,529			169,477			201,107
(Benefit from) provision for credit losses														(9,949	)		19,333			(9,949	)		38,916
Net interest income after (benefit from)/provision for credit losses														92,312			57,875			169,518			112,365
NONINTEREST INCOME
Trust revenue		3,131			3,490			10,154			9,917			3,264			3,368			6,366			7,023
Service charges on deposits		19,078			19,866			54,642			56,643			20,524			16,760			39,624			35,564
Securities transactions (includes 0 accumulated other comprehensive income reclassifications)		—			—			(545	)		821			172			(595	)		267			(545	)
Income from sales of loans		1,873			964			4,215			2,530			2,133			1,561			4,143			2,342
Insurance commissions		5,197			5,535			15,316			15,220			5,015			4,443			11,004			10,119
Cash management		3,701			4,430			12,276			12,608			3,068			4,255			6,071			8,575
(Loss)/gain on sale of other assets		(15	)		(1	)		120			(12	)
Gain on sale of other assets														73			49			2,712			135
Other		1,610			1,343			5,624			3,978			10,369			2,241			14,366			4,014
Total noninterest income		34,575			35,627			101,802			101,705			44,618			32,082			84,553			67,227
NONINTEREST EXPENSE
Salaries and employee benefits		41,995			40,354			123,977			112,649			41,992			42,226			81,569			81,982
Occupancy, net		4,503			3,386			11,888			8,966			4,528			3,839			8,876			7,385
Depreciation		3,795			3,268			10,830			9,268			4,133			3,544			8,010			7,035
Amortization of intangible assets		968			842			2,900			2,359			809			968			1,602			1,932
Data processing services		1,669			1,467			4,990			4,209			1,660			1,629			3,338			3,321
Net loss/(income) from other real estate owned		196			26			(1,951	)		(361	)		3,357			(12	)		4,867			(2,147	)
Marketing and business promotion		1,485			2,047			5,325			6,227			1,648			1,485			3,527			3,840
Deposit insurance		723			(81	)		1,224			996			766			365			1,642			501
Other		10,749			10,882			32,936			30,692			15,130			10,607			25,555			22,187
Total noninterest expense		66,083			62,191			192,119			175,005			74,023			64,651			138,986			126,036
Income before taxes		25,604			42,965			79,160			127,807			62,907			25,306			115,085			53,556
Income tax expense		4,714			9,597			14,932			28,435			14,715			4,576			24,373			10,218
Net income	$	20,890		$	33,368		$	64,228		$	99,372		$	48,192		$	20,730		$	90,712		$	43,338
NET INCOME PER COMMON SHARE
Basic	$	0.64		$	1.02		$	1.97		$	3.04		$	1.47		$	0.64		$	2.77		$	1.33
Diluted	$	0.63		$	1.00		$	1.94		$	2.98		$	1.45		$	0.63		$	2.72		$	1.31
OTHER COMPREHENSIVE (LOSS) GAIN
Unrealized (loss) gain on securities, net of tax of $335, $1, $(1,756) and $(1,979) respectively		(982	)		(26	)		5,254			5,768
Unrealized (losses)/gains on debt securities, net of tax of $472, $85, $808 and $(2,091) respectively														(1,007	)		(189	)		(2,013	)		6,236
Comprehensive income	$	19,908		$	33,342		$	69,482		$	105,140		$	47,185		$	20,541		$	88,699		$	49,574

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

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
COMMON STOCK
Issued at beginning of period	$	32,663	��	$	32,640		$	32,694		$	32,604		$	32,771		$	32,647		$	32,720		$	32,694
Shares issued for stock options		16			4			44			40			14			16			65			28
Shares acquired and canceled		—			—			(59	)		—			—			—			—			(59	)
Issued at end of period	$	32,679		$	32,644		$	32,679		$	32,644		$	32,785		$	32,663		$	32,785		$	32,663
CAPITAL SURPLUS
Balance at beginning of period	$	154,692		$	150,995		$	153,353		$	149,709		$	157,450		$	153,999		$	156,574		$	153,353
Common stock issued for stock options		306			128			813			873			399			287			1,657			507
Net cash settlement of options														—			—			(958	)		—
Stock-based compensation arrangements		433			347			1,265			888			473			406			1,049			832
Balance at end of period	$	155,431		$	151,470		$	155,431		$	151,470		$	158,322		$	154,692		$	158,322		$	154,692
RETAINED EARNINGS
Balance at beginning of period	$	837,154		$	769,090		$	815,488		$	722,615		$	898,026		$	826,855		$	871,161		$	815,488
Net income		20,890			33,368			64,228			99,372			48,192			20,730			90,712			43,338
Cumulative effect of change in accounting principle, net of tax of $925 (Note 1)		—			—			2,270			—
Dividends on common stock ($0.34, $0.32, $0.98 and $0.92 per share, respectively)		(11,110	)		(10,449	)		(32,013	)		(29,978	)
Cumulative effect of change in accounting principle, net of tax of $925														—			—			—			2,270
Dividends on common stock ($0.34, $0.32, $0.68 and $0.64 per share, respectively)														(11,151	)		(10,431	)		(22,285	)		(20,903	)
Net cash settlement of options														—			—			(4,521	)		—
Common stock acquired and canceled		—			—			(3,039	)		—			—			—			—			(3,039	)
Balance at end of period	$	846,934		$	792,009		$	846,934		$	792,009		$	935,067		$	837,154		$	935,067		$	837,154
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gain/(losses) on securities:
Unrealized (losses)/gains on securities:
Balance at beginning of period	$	9,690		$	3,655		$	3,454		$	(2,139	)	$	6,424		$	9,879		$	7,430		$	3,454
Net change		(982	)		(26	)		5,254			5,768			(1,007	)		(189	)		(2,013	)		6,236
Balance at end of period	$	8,708		$	3,629		$	8,708		$	3,629		$	5,417		$	9,690		$	5,417		$	9,690
Total stockholders’ equity	$	1,043,752		$	979,752		$	1,043,752		$	979,752		$	1,131,591		$	1,034,199		$	1,131,591		$	1,034,199

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

	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	64,228		$	99,372		$	90,712		$	43,338
Adjustments to reconcile to net cash provided by operating activities:
Provision for credit losses		57,656			6,875
(Benefit from) provision for credit losses								(9,949	)		38,916
Depreciation and amortization		13,730			11,627			9,612			8,967
Net amortization of securities premiums and discounts		(240	)		(3,764	)		1,670			(340	)
Realized securities losses (gains)		545			(821	)
Realized securities (gains)/losses								(267	)		545
Gain on sales of loans		(4,215	)		(2,530	)		(4,143	)		(2,342	)
Cash receipts from the sale of loans originated for sale		297,690			164,319			221,051			171,433
Cash disbursements for loans originated for sale		(309,623	)		(169,740	)		(200,820	)		(179,996	)
Deferred income tax benefit		(8,664	)		(752	)		(1,495	)		(3,987	)
Gain on sale of other assets		(2,308	)		(454	)		(2,606	)		(2,289	)
(Increase)/decrease in interest receivable		(1,084	)		1,243
(Decrease)/increase in interest payable		(1,286	)		235
Increase/(decrease) in interest receivable								2,048			(3,438	)
Decrease in interest payable								(330	)		(943	)
Amortization of stock-based compensation arrangements		1,265			888			1,049			832
Excess tax benefit from stock-based compensation arrangements		(219	)		(288	)		(1,693	)		(143	)
Other, net		3,781			6,255			29,328			12,094
Net cash provided by operating activities		111,256			112,465			134,167			82,647
INVESTING ACTIVITIES
Net cash received from acquisitions, net of cash paid		18,397			77,672			12,412			18,397
Net (decrease)/increase in federal funds sold		1,000			(300	)
Purchases of held for investment securities		(1,395	)		(1,010	)
Purchases of available for sale securities		(455,069	)		(99,093	)
Proceeds from maturities, calls and paydowns of held for investment securities		554			527
Proceeds from maturities, calls and paydowns of available for sale securities		357,845			369,073
Net cash paid from sale of assets and liabilities, net of cash received								(13,733	)		—
Net decrease in federal funds sold								15,000			1,000
Purchases of held for investment debt securities								(845	)		(1,395	)
Purchases of available for sale debt securities								(251,673	)		(255,178	)
Proceeds from maturities, calls and paydowns of held for investment debt securities								820			470
Proceeds from maturities, calls and paydowns of available for sale debt securities								273,872			148,365
Purchase of equity securities		(624	)		(2,806	)		(470	)		(234	)
Proceeds from paydowns and sales of equity securities		445			1,897			392			437
Net change in loans		(955,531	)		(250,095	)		388,357			(993,997	)
Purchases of premises, equipment and computer software		(48,317	)		(19,865	)		(15,200	)		(30,292	)
Purchase of tax credits		(731	)		(7,180	)		(2,048	)		(357	)
Other, net		6,565			4,587			3,567			5,641
Net cash (used in) provided by investing activities		(1,076,861	)		73,407
Net cash provided by (used in) investing activities								410,451			(1,107,143	)
FINANCING ACTIVITIES
Net change in deposits		967,250			121,260			1,444,742			958,030
Net change in short-term borrowings		(800	)		(1,075	)		2,000			7,000
Proceeds from long-term borrowings		3,000		—				—			3,000
Paydown of long-term borrowings		(3,000	)	—
Proceeds from issuance of subordinated notes, net of debt issuance costs								59,150			—
Issuance of common stock in connection with stock options, net		857			913			1,722			535
Common stock acquired		(3,098	)	—				—			(3,098	)
Net cash settlement of options								(5,479	)		—
Cash dividends paid		(31,361	)		(29,359	)		(22,267	)		(20,909	)
Net cash provided by financing activities		932,848			91,739			1,479,868			944,558
Net (decrease)/increase in cash, due from banks and interest-bearing deposits		(32,757	)		277,611
Net increase/(decrease) in cash, due from banks and interest-bearing deposits								2,024,486			(79,938	)
Cash, due from banks and interest-bearing deposits at the beginning of the period		1,868,281			1,424,255			1,616,912			1,868,281
Cash, due from banks and interest-bearing deposits at the end of the period	$	1,835,524		$	1,701,866		$	3,641,398		$	1,788,343
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	18,741		$	42,100		$	5,736		$	15,053
Cash paid during the period for income taxes	$	22,025		$	26,775		$	15,400		$	5,075
Noncash investing and financing activities:
Cash consideration for acquisitions	$	2,861		$	123,457		$	21,000		$	2,861
Fair value of assets acquired in acquisitions	$	47,838		$	729,365		$	284,224		$	47,838
Liabilities assumed in acquisitions	$	45,040		$	605,908		$	256,412		$	45,040
Unpaid common stock dividends declared	$	11,105		$	10,445		$	11,143		$	10,447

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

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, ~~2019.~~2020.

The accompanying unaudited interim consolidated financial statements include the accounts of BancFirst Corporation, Council Oak Partners, LLC, BancFirst Insurance Services, Inc., ~~BancFirst Risk & Insurance Company,~~ Pegasus Bank and BancFirst and its subsidiaries. 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 financial statements and footnotes included in BancFirst Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, 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.

Certain items in prior financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders’ equity or comprehensive income.

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. Such estimates and assumptions may change over time and actual amounts realized may differ from those reported.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820).” ASU 2018-13 modifies disclosure requirements on fair value measurements in Topic 820. ASU 2018-13 was effective for the Company on January 1, 2020. ASU No. 2018-13 was adopted on January 1, 2020 and did not have a significant impact on the Company’s financial statements.

On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Accounting Standards Codification (“ASC”) 326 replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in

leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for purchased loans and securities with credit deterioration and available-for-sale debt securities.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Operating results for periods from January 1, 2020 are presented in accordance with ASC 326 while prior period amounts continue to be reported in accordance with previously applicable standards and the accounting policies described in our 2019 Form 10-K. The Company recorded a net increase to retained earnings of $2.3 million, net of tax of $925,000, as of January 1, 2020 for the cumulative effect of adopting ASC 326, and the impact on our results of operations and cash flows was not material.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (PCD) that were previously classified as purchased credit impaired (PCI) and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of approximately $1.2 million to the allowance for credit losses.

The Company has not recorded an allowance for credit losses against its available-for-sale securities, as the credit risk is not material. The following table illustrates the impact of ASC 326 on the allowance for credit losses on the Company’s loans as of January 1, 2020.

The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. In order to estimate expected losses using historical loss information, the Company elected to utilize a methodology known as vintage loss analysis for substantially all of our loan portfolio. Vintage loss analysis measures impairment based on the age of the accounts and the historical asset performance of assets with similar risk characteristics. Vintage loss analysis accounts for expected losses by allowing the Company to calculate the cumulative loss rates of a given loan pool and in so doing, determine the loan pool’s lifetime expected loss experience. This includes a reasonable approximation of probable and estimable future losses determined by applying historical net charge off information to forward looking qualitative and environmental factors. First, the Company determined the appropriate type of financial assets that share similar risk characteristics, and then the Company developed a cumulative loss curve for the applicable financial assets based on historical data using different “vintages” analyzed by year of origination. This is done by dividing each year’s net charge-offs by the original principal balance. The respective vintage’s original principal balance remains the denominator in each annual calculation, as it references the specific vintage’s original balance. The loss experience of this original balance is tracked annually and summed over the life of the loan for each separate loan pool leaving a cumulative, life of credit loss rate based on historic averages weighted towards more recent loss experience. In addition to life of credit loss data, primary drivers like macroeconomic indicators of qualitative factors are used as adjustments to the expected loss calculation to reach a forecast supported by both quantitative and qualitative data points. The intent is to express the impact of changes in external factors while incorporating analysis of where the loan pool is in its loss history.

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. The Company has made the accounting policy election to use the fair value of the collateral to measure expected credit losses on collateral-dependent financial assets. When management 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 connection with the adoption of ASC 326, the Company revised certain accounting policies and implemented accounting policy elections. The revised accounting policies are described below.~~

~~Loans~~: Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts. Accrued interest receivable totaled $28.7 million at September 30, 2020 and $27.4 million at December 31, 2019 and was reported in accrued interest receivable and other assets on the consolidated balance sheets. ~~The Company has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses.~~ ~~Interest income is accrued on the unpaid principal balance using the simple-interest method on the daily balances of the principal amounts outstanding.~~

Interest income on consumer and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection. Consumer loans are charged off at 180 days past due and commercial loans are charged off to the extent principal or interest is deemed uncollectible. Past-due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Troubled debt restructurings are loans on which, due to the borrower’s financial difficulties, the Company has granted a concession that the Company would not otherwise consider for borrowers of similar credit quality. This may include a transfer of real estate or other assets from the borrower, a modification of loan terms, or a combination of the two. Modifications of terms that could potentially qualify as a restructuring include reduction of contractual interest rate, extension of the maturity date at a contractual interest rate lower than the current rate for new debt with similar risk, and a reduction of the face amount of debt or forgiveness of either principal or accrued interest. A loan continues to qualify as restructured until a consistent payment history or change in the borrower’s financial condition has been evidenced, generally for no less than twelve months. If the restructuring agreement specifies an interest rate at the time of the restructuring that is greater than or equal to the rate that the Company is willing to accept for a new extension of credit with comparable risk, then the loan is no longer considered a restructured loan if it is in compliance with the modified terms in calendar years after the year of restructure.

~~Purchased Credit Deteriorated (PCD) Loans~~: The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.

~~Allowance for Credit Losses - Loans~~: The allowance for credit losses is a valuation account that is deducted from the loans amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. In connection with our adoption of ASC 326, changes were made to our primary portfolio segments to align with the methodology applied in determining the allowance under CECL. The Company has identified the following portfolio segments, which includes the applicable weighted average life, and measures the allowance for credit losses using the vintage loss analysis adjusted for qualitative factors:

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

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

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

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

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

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

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

~~Farmland.~~ This category includes loans secured by all land known to be used or usable for agricultural purposes, such as crop and livestock production. Farmland includes grazing or pasture land, whether tillable or not and whether wooded or not.

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

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

~~Other loans.~~ Other loans consist of loans approved by the Small Business Administration (SBA), which include loans funded through the Paycheck Protection Program (PPP). Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans.

~~Pegasus Bank.~~ Pegasus Bank’s loans are commercial and consumer loans mostly to customers within Texas secured by real estate. Pegasus Bank also includes commercial and industrial loans, which includes loans to companies in the oil and gas industry.

The Company considers various factors to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical loan loss experience and economic conditions.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as the political, legal, and regulatory environment, technology and consumer preferences. Historical loss information is also adjusted for reasonable and supportable changes in national and local economic conditions, such as oil and gas prices, national and local unemployment, real gross domestic product (“GDP”), house price index (“HPI”), consumer price index (“CPI”), rental vacancies, and retail sales. Economic conditions are forecast as "current conditions" over the forecast period. Forecast models were used to validate credit performance during the forecast period. Beyond the reasonable and supportable forecast, the economic expectation reverts to the historical average, which is determined by the weighted average life of each loan pool.

~~Determining the Contractual Term:~~ Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

~~Troubled Debt Restructurings (TDRs~~): The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.

~~Allowance for Credit Losses on Off-Balance Sheet Credit Exposures~~: The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Based on a low likelihood that funding will occur and the Company’s ability to manage the extension of credit to our borrowers, the allowance for credit losses on off-balance sheet credit exposure is not material.

~~Allowance for Credit Losses - Available-for-Sale Securities~~: The Company reviews its portfolio of securities in an unrealized loss position at least quarterly. The Company first assesses whether it intends to sell or it is more-likely-than-not that it will be required to sell the securities before recovery of the amortized cost basis. If either of these criteria is met, the securities amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, the Company considers, among other things, the period of time the security has been in an unrealized loss position, and performance of any underlying collateral and adverse conditions specifically related to the security. At December 31, 2019 and September 30, 2020 approximately 95% of the available for sale securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies. The Company does not consider the unrealized position of these securities to be the result of credit factors, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company has not recorded an allowance for credit losses against its securities portfolio, as the credit risk is not material.

~~PPP Fee Income Policy:~~ The PPP, established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides that the SBA will pay processing fees of up to 5% to lenders based on the volume of the PPP loans disbursed. The fee is based on the balance of each PPP loan outstanding at the time of full disbursement. As of September 30, 2020, the Company had received approximately $30.1 million in processing fees from the SBA. The unamortized balance of these fees on each loan is reported on the Company's balance sheet as part of the loan balance to which it relates and is recognized over the remaining life of the loan as an adjustment of yield. Upon notification from the SBA of the amount of the PPP loan to be forgiven the acceleration of recognition of deferred loan fee will occur for the percentage of the loan forgiven.

~~Section 4013~~On June 17, 2021, the Company completed a private placement, under Regulation D of the ~~CARES~~Securities Act ~~and~~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 ~~Interagency Statement on Loan Modifications by~~Notes to Consolidated Financial ~~Institutions provide temporary relief from~~Statements for a complete discussion of the ~~accounting and reporting requirements for TDRs regarding certain loan modifications related to COVID-19 that are offered by financial institutions~~Company’s subordinated debt.

Specifically, the CARES Act provides that a financial institution may elect to suspend (1) the requirements under U.S. GAAP for certain loan modifications that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. The modifications that would qualify for this exception include any modification involving a loan that was not more than 30 days past due as of December 31, 2019, that occurs during the “applicable period,” including any of the following:

The exception does not apply to any adverse impact on the credit of a borrower that is not related to the COVID-19 pandemic. Furthermore, even when the exception is applied, an entity may determine that it is appropriate to place the loan on nonaccrual status.

As of September 30, 2020, the Company has identified $104.5 million in loans that have been modified according to the CARES Act terms. As of September 30, 2020, these loans have not been deemed nonaccrual loans.

The Company’s principal subsidiary bank, BancFirst, has entered into an agreement to sell approximately $21.5 million in loans and $38.0 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma. The transaction is scheduled to be completed during the first quarter ofOn May 20, 2021, ~~and is subject to regulatory approval.~~

~~On March 5, 2020,~~ the Company purchased approximately ~~$47.8~~$284 million in total assets, which included ~~$22.9~~$195 million in loans, and assumed approximately ~~$45.0~~$256 million in deposits and certain other obligations, from The First National Bank and Trust Company of ~~The Citizens State Bank of Okemah,~~Vinita, Oklahoma ~~“Citizens”~~ for a purchase price of ~~$2.9~~$21.0 million. The Company recorded a bargain purchase gain related to this purchase of approximately $6.0 million, which is included in other noninterest income on the statement of comprehensive income and other operating activities on the statement of cash flow. The bargain purchase gain is a noncash item on the statement of cash flow. In addition, the Company recorded expenses related to this purchase of approximately $4.0 million, which are included in noninterest expense. As a result of the purchase, the Company recorded a core deposit intangible of approximately ~~$206,000 and goodwill of approximately $1.3~~$1.9 million. The effect of this purchase was included in the consolidated financial ~~statements~~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. ~~Citizens~~The First National Bank and Trust Company of Vinita was ~~an Oklahoma state-chartered~~a nationally chartered bank with 2 banking locations in ~~Okemah~~Vinita and ~~Paden,~~Grove, Oklahoma. ~~These banking locations became branches of BancFirst.~~The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date.

InOn January ~~2020,~~22, 2021, the Company sold ~~property held~~approximately $21 million in ~~other real estate owned for~~loans and approximately $38 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma. The Company recorded a ~~$2.2~~gain on the transaction of $2.5 million, ~~gain.~~

~~On August 15, 2019 the Company acquired Pegasus Bank, a Texas state-charted bank with three banking locations~~which is included in ~~Dallas, Texas. This acquisition is disclosed in Note (2) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.~~noninterest income.

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
September 30, 2020	(Dollars in thousands)
June 30, 2021										(Dollars in thousands)
Mortgage backed securities (1)	$	66	$	3	$	—		$	69	$	43	$	2	$	—		$	45
States and political subdivisions		2,405		37		—			2,442		2,445		—		—			2,445
Other securities		500		—		—			500		500		—		—			500
Total	$	2,971	$	40	$	—		$	3,011	$	2,988	$	2	$	—		$	2,990
December 31, 2019
December 31, 2020
Mortgage backed securities (1)	$	93	$	4	$	—		$	97	$	59	$	3	$	—		$	62
States and political subdivisions		1,310		1		(5	)		1,306		2,405		18		(1	)		2,422
Other securities		500		—		—			500		500		—		—			500
Total	$	1,903	$	5	$	(5	)	$	1,903	$	2,964	$	21	$	(1	)	$	2,984

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
September 30, 2020	(Dollars in thousands)
June 30, 2021										(Dollars in thousands)
U.S. treasuries	$	500,268	$	11,425	$	—		$	511,693	$	465,762	$	6,680	$	(600	)	$	471,842
U.S. federal agencies		20,852		—		(63	)		20,789		25,273		324		(2	)		25,595
Mortgage backed securities (1)		15,709		429		—			16,138		38,407		471		(109	)		38,769
States and political subdivisions		32,157		479		—			32,636		10,874		227		—			11,101
Asset backed securities		13,333		—		(619	)		12,714		13,346		130		—			13,476
Total	$	582,319	$	12,333	$	(682	)	$	593,970	$	553,662	$	7,832	$	(711	)	$	560,783
December 31, 2019
December 31, 2020
U.S. treasuries	$	409,488	$	4,974	$	(13	)	$	414,449	$	465,416	$	9,820	$	—		$	475,236
U.S. federal agencies		23,039		23		(38	)		23,024		19,697		1		(60	)		19,638
Mortgage backed securities (1)		16,941		128		(64	)		17,005		15,268		428		—			15,696
States and political subdivisions		22,294		282		(45	)		22,531		28,571		377		—			28,948
Asset backed securities		13,320		—		(606	)		12,714		13,337		—		(623	)		12,714
Total	$	485,082	$	5,407	$	(766	)	$	489,723	$	542,289	$	10,626	$	(683	)	$	552,232

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.

	September 30, 2020				December 31, 2019				June 30, 2021				December 31, 2020
	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	$	805	$	811	$	300	$	300	$	576	$	576	$	807	$	809
After one year but within five years		1,597		1,631		1,058		1,055		2,407		2,409		2,091		2,110
After five years but within ten years		568		568		543		546		4		4		65		64
After ten years		1		1		2		2		1		1		1		1
Total	$	2,971	$	3,011	$	1,903	$	1,903	$	2,988	$	2,990	$	2,964	$	2,984
Available for Sale
Contractual maturity of debt securities:
Within one year	$	331,600	$	332,496	$	186,373	$	186,539	$	110,293	$	111,495	$	339,752	$	341,102
After one year but within five years		209,080		219,983		252,519		257,430		373,494		378,554		162,401		171,135
After five years but within ten years		3,850		4,005		5,873		6,008		9,925		10,467		3,753		3,910
After ten years		37,789		37,486		40,317		39,746		59,950		60,267		36,383		36,085
Total debt securities	$	582,319	$	593,970	$	485,082	$	489,723	$	553,662	$	560,783	$	542,289	$	552,232

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:

~~In connection with our adoption of~~ ~~ASC 326, changes were made to our primary portfolio segments to align with the methodology applied in determining the allowance under CECL.~~ Loans held for investment are summarized by portfolio segment as follows:

	September 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
	Amount		Amount		Amount		Amount
	(Dollars in thousands)				(Dollars in thousands)
BancFirst
Real estate:
Commercial real estate owner occupied	$	648,972	$	621,188	$	661,530	$	641,987
Commercial real estate non-owner occupied		974,308		851,200		989,560		971,158
Construction and development < 60 months		229,116		287,138		297,205		229,615
Construction residential real estate < 60 months		205,543		189,480		208,210		206,195
Residential real estate first lien		853,654		834,849		865,557		853,316
Residential real estate all other		175,370		187,647		163,290		168,081
Farmland		251,410		246,988		269,008		252,958
Commercial and agricultural non-real estate		1,375,246		1,499,404		1,105,777		1,159,810
Consumer non-real estate		349,338		359,529		371,557		355,405
Oil and gas						130,459		179,355
Other loans (2)		1,024,539		154,015		543,034		822,078
Pegasus Bank		524,597		430,705		586,043		554,548
Total (1)	$	6,612,093	$	5,662,143	$	6,191,230	$	6,394,506
(1) Excludes accrued interest receivable of $28.7 million at September 30, 2020 and $27.4 million at December 31, 2019, that is recorded in accrued interest receivable and other assets.
(2) Includes PPP loans held for investment of $830.3 million, net of unamortized processing fees of $22.5 million at September 30, 2020.
(1) Excludes accrued interest receivable of $22.9 million at June 30, 2021 and $26.0 million at December 31, 2020, that is recorded in accrued interest receivable and other assets.					(1) Excludes accrued interest receivable of $22.9 million at June 30, 2021 and $26.0 million at December 31, 2020, that is recorded in accrued interest receivable and other assets.
(2) Includes PPP loans held for investment of $368.6 million, net of unamortized processing fees of $16.6 million at June 30, 2021 and $652.7 million, net of unamortized processing fees of $14.5 million at December 31, 2020.					(2) Includes PPP loans held for investment of $368.6 million, net of unamortized processing fees of $16.6 million at June 30, 2021 and $652.7 million, net of unamortized processing fees of $14.5 million at December 31, 2020.

Other loans. Other loans consist of loans approved by the Small Business Administration (“SBA”), which include loans funded through the Paycheck Protection Program (“PPP”). Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans. In April 2020, the Company began originating loans to qualified small businesses under the PPP administered by the SBA. The Company had processing fees, which were recognized as interest income related to the PPP loans totaling $11.9 million and $3.7 million during the three months ended June 30, 2021 and 2020, respectively and $21.7 million and $3.7 million during the six months ended June 30, 2021 and 2020, respectively.

BancFirst’s loans are mostly to customers within Oklahoma and approximately ~~50%~~56% 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~~Pegasus Bank’s loans are mostly to customers within Texas and approximately $297 million or 51% of the loans are secured by real estate at June 30, 2021. Pegasus Bank’s commercial and agricultural non-real estate loans were approximately $268 million at June 30, 2021 and approximately $262 million at December 31, 2020.

BancFirst and Pegasus Bank’s commercial and agricultural non-real estate and oil and gas loan ~~category includes~~categories include upstream and midstream energy loans, and loans to companies that provide ancillary services to the energy industry, such as transportation, wellsite preparation contractors and equipment manufacturers. The balance of upstream energy loans was approximately $219 million at September 30, 2020 and approximately $189 million at December 31, 2019. The balance of midstream energy loans was approximately $47 million at September 30, 2020 and approximately $41 million at December 31, 2019. The balance of the ancillary services energy loans was approximately $80 million at September 30, 2020 and approximately $90 million at December 31, 2019.

~~Pegasus Bank’s~~Energy loans are mostly to customers within Texas and approximately $266 million or 50% of the loans are secured by real estate at September 30, 2020. Pegasus Bank’s commercial and agricultural non-real estate loan were approximately $242 million at September 30, 2020 and approximately $172 million at December 31, 2019. Pegasus Bank’s commercial and agricultural non-real estate loan category includes upstream energy loans and loans to companies that provide ancillary services to the energy industry, suchsummarized as transportation, preparation contractors and equipment manufacturers. The balance of upstream energy loans was approximately $102 million at September 30, 2020 and approximately $57 million at December 31, 2019. The balance of the ancillary services energy loans was approximately $9 million at September 30, 2020 and approximately $7 million at December 31, 2019.follows:

As of September 30, 2020, the Company had $830.3 million in PPP loans held for investment, net of unamortized processing fees of $22.5 million, and approximately $1.4 million of PPP loans held for sale. Through September 30, 2020, $7.6 million of processing fees were recognized as interest income.

Accounting policies related to appraisals, and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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:

	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
	(Dollars in thousands)				(Dollars in thousands)
Troubled debt restructurings	$	2,837	$	18,010	$	7,485	$	7,784
Other real estate owned and repossessed assets	$	4,939	$	6,073	$	40,183	$	32,480

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 the first half of 2021, the Company completed the move to its new corporate headquarters and transferred approximately $2.4 million from premises and equipment to other real estate owned related to its previous headquarters. In addition, other real estate owned of approximately $2.5 million was purchased from the First National Bank and Trust Company of Vinita, Oklahoma.

~~At September 30, 2020,~~During the ~~Company’s principal subsidiary bank, BancFirst, had approximately $21.5~~first half of 2021, the Company sold property held in other real estate owned for a total loss of $105,000, compared to a total gain of $2.3 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~~the first half of ~~September 30, 2020, the Company has transferred $21.5 million from loans held for investment (net of unearned interest) to loans held for sale.~~2020.

Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately ~~$2.1~~$1.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and approximately ~~$1.4 million~~$983,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

~~Approximately $8.4 million of nonaccrual~~Nonaccrual loans ~~are~~ guaranteed by government ~~agencies.~~agencies totaled approximately $3.5 million at June 30, 2021 and approximately $7.8 million at December 31, 2020.

The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment. ~~Residential real estate refers to one-to-four family real estate.~~

	September 30, 2020		June 30, 2021		December 31, 2020
	(Dollars in thousands)		(Dollars in thousands)
BancFirst
Real estate:
Commercial real estate owner occupied	$	2,447	$	2,572	$	1,404
Commercial real estate non-owner occupied		20,476		422		4,719
Construction and development < 60 months		115		88		95
Construction residential real estate < 60 months		—		—		—
Residential real estate first lien		4,131		3,518		3,615
Residential real estate all other		1,487		1,188		1,362
Farmland		10,517		6,354		7,901
Commercial and agricultural non-real estate		37,554		13,185		12,782
Consumer non-real estate		363		188		268
Oil and gas				—		—
Other loans		5,295		2,287		5,399
Pegasus Bank		—		—		—
Total	$	82,385	$	29,802	$	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 all other		3,060
Non-consumer non-real estate		2,915
Consumer non-real estate		264
Other loans		1,083
Acquired loans		4,496
Pegasus Bank		851
Total	$	17,965

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of our loans held for investment:

	Age Analysis of Past Due Loans														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		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)														(Dollars in thousands)
As of September 30, 2020
As of June 30, 2021
BancFirst
Real estate:
Commercial real estate owner occupied	$	509	$	461	$	2,038	$	3,008	$	645,964	$	648,972	$	78	$	604	$	—	$	1,012	$	1,616	$	659,914	$	661,530	$	80
Commercial real estate non-owner occupied		248		38		35		321		973,987		974,308		35		205		—		112		317		989,243		989,560		37
Construction and development < 60 months		179		—		1,605		1,784		227,332		229,116		1,605		53		1,605		137		1,795		295,410		297,205		137
Construction residential real estate < 60 months		203		—		406		609		204,934		205,543		406		103		—		—		103		208,107		208,210		—
Residential real estate first lien		4,326		1,292		3,310		8,928		844,726		853,654		651		3,639		447		3,989		8,075		857,482		865,557		2,070
Residential real estate all other		1,177		65		942		2,184		173,186		175,370		217		1,195		40		1,536		2,771		160,519		163,290		458
Farmland		5,940		338		3,256		9,534		241,876		251,410		384		1,036		989		4,327		6,352		262,656		269,008		157
Commercial and agricultural non-real estate		5,436		10,661		23,273		39,370		1,335,876		1,375,246		2,681		3,780		2,821		8,393		14,994		1,090,783		1,105,777		638
Consumer non-real estate		1,996		519		527		3,042		346,296		349,338		288		1,620		353		221		2,194		369,363		371,557		190
Oil and gas																—		—		—		—		130,459		130,459		—
Other loans		199		250		5,232		5,681		1,018,858		1,024,539		67		1,472		478		2,102		4,052		538,982		543,034		619
Pegasus Bank		—		—		—		—		524,597		524,597		—		—		—		—		—		586,043		586,043		—
Total	$	20,213	$	13,624	$	40,624	$	74,461	$	6,537,632	$	6,612,093	$	6,412	$	13,707	$	6,733	$	21,829	$	42,269	$	6,148,961	$	6,191,230	$	4,386

As of December 31, 2019
As of December 31, 2020
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
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		1,670		8		4,613		6,291		147,724		154,015		4,426		951		1,223		6,618		8,792		813,286		822,078		2,170
Acquired loans		2,167		1,376		3,447		6,990		147,691		154,681		555
Pegasus Bank		—		—		851		851		429,854		430,705		—		—		—		—		—		554,548		554,548		—
Total	$	20,728	$	6,656	$	22,409	$	49,793	$	5,612,350	$	5,662,143	$	11,834	$	16,174	$	5,574	$	23,784	$	45,532	$	6,348,974	$	6,394,506	$	4,802

Due to the impacts of the COVID-19 pandemic, the Company ~~has~~had approximately ~~$104.5~~$61.8 million in modified loans as of June 30, 2021 and $81.7 million in modified loans as of December 31, 2020, most of which ~~are~~were secured by commercial real ~~estate, as of September 30, 2020.~~estate. These modifications were undertaken in response to Section 4013 of the CARES Act and the regulatory intent outlined in the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus and to provide businesses financial flexibility until the economy has time to recover to a more normal level of activity. However, these modifications, which typically involve payment modifications and forbearance, also have the effect of delaying recognition of loans that may ultimately be permanently impaired. ~~Consequently, it is reasonable to expect that when temporary regulatory accounting relief and payment modifications cease, there could be a marked increase in credit impairment and restructured loans.~~ 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~~Current Loans in the table above.

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 and the table summarizing our gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2020, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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:~~grades as of June 30, 2021:

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 September 30, 2020

BancFirst

Commercial real estate owner occupied

Grade 1

$119,516

$109,276

$77,708

$52,686

$39,161

$97,123

$11,040

$506,510
Grade 2

35,152

28,126

12,584

9,588

12,940

27,302

3,957

129,649
Grade 3

448

3,990

345

1,239

1,324

2,823

85

10,254
Grade 4

44

75

1,118

—

388

467

467

2,559
Total commercial real estate owner occupied loans

155,160

141,467

91,755

63,513

53,813

127,715

15,549

648,972
Commercial real estate non-owner occupied

Grade 1

203,748

170,966

93,283

81,087

86,160

97,595

12,388

745,227
Grade 2

43,767

51,241

26,932

10,397

8,930

51,047

3,917

196,231
Grade 3

1,126

3,087

7,107

555

41

296

70

12,282
Grade 4

20,477

91

—

—

—

—

—

20,568
Total commercial real estate non-owner occupied loans

269,118

225,385

127,322

92,039

95,131

148,938

16,375

974,308
Construction and development < 60 months

Grade 1

98,335

67,064

15,893

4,877

1,998

2,493

12,078

202,738
Grade 2

9,837

8,828

1,637

835

167

551

350

22,205
Grade 3

4,050

—

9

—

—

—

—

4,059
Grade 4

—

68

9

23

—

—

—

100
Grade 5

14

—

—

—

—

—

—

14
Total construction and development < 60 months

112,236

75,960

17,548

5,735

2,165

3,044

12,428

229,116
Construction residential real estate < 60 months

Grade 1

136,683

30,650

69

22

36

180

6,047

173,687
Grade 2

22,814

6,202

113

—

—

475

285

29,889
Grade 3

1,848

119

—

—

—

—

—

1,967
Total construction residential real estate < 60 months

161,345

36,971

182

22

36

655

6,332

205,543
Residential real estate first lien

Grade 1

193,583

152,017

87,058

68,286

52,044

151,406

—

704,394
Grade 2

21,833

24,877

22,230

12,256

12,252

34,614

—

128,062
Grade 3

2,623

1,986

1,511

1,991

1,902

5,816

—

15,829
Grade 4

581

843

589

291

1,363

1,651

—

5,318
Grade 5

—

—

—

—

51

—

—

51
Total residential real estate first lien

218,620

179,723

111,388

82,824

67,612

193,487

—

853,654
Residential real estate all other

Grade 1

17,918

15,800

11,956

7,509

5,819

12,591

31,491

103,084
Grade 2

2,735

2,010

1,535

1,914

465

2,593

56,292

67,544
Grade 3

358

486

355

121

223

299

922

2,764
Grade 4

183

257

570

65

75

702

56

1,908
Grade 5

—

70

—

—

—

—

—

70
Total residential real estate all other

21,194

18,623

14,416

9,609

6,582

16,185

88,761

175,370
Farmland

Grade 1

37,586

29,261

21,463

14,672

14,438

32,080

7,156

156,656
Grade 2

12,109

31,102

6,920

7,212

5,097

9,858

6,620

78,918
Grade 3

1,801

313

1,498

1,057

580

810

1,934

7,993
Grade 4

450

14

4,594

304

374

378

1,729

7,843
Total farmland

51,946

60,690

34,475

23,245

20,489

43,126

17,439

251,410
Commercial and agricultural non-real estate

Grade 1

246,924

205,433

137,219

83,013

51,528

42,830

281,100

1,048,047
Grade 2

78,784

37,525

27,662

7,598

6,626

25,172

71,701

255,068
Grade 3

10,273

5,326

1,605

1,305

363

384

16,684

35,940
Grade 4

25,556

2,036

1,865

2,312

1,362

302

2,758

36,191
Total commercial and agricultural non-real estate

361,537

250,320

168,351

94,228

59,879

68,688

372,243

1,375,246
Consumer non-real estate

Grade 1

129,050

110,557

50,270

17,947

6,330

2,605

6,432

323,191
Grade 2

9,299

7,265

4,171

1,092

648

334

281

23,090
Grade 3

389

895

569

272

95

74

16

2,310
Grade 4

70

300

169

94

40

73

1

747
Total consumer non-real estate

138,808

119,017

55,179

19,405

7,113

3,086

6,730

349,338

Other loans
									Term Loans Amortized Cost Basis by Origination Year
									2021	2020	2019	2018	2017	Prior	Revolving Loans Amortized Cost Basis	Total
									(Dollars in thousands)
As of June 30, 2021
BancFirst
Commercial real estate owner occupied
Grade 1	883,501	30,094	27,022	21,115	18,894	14,807	21,178	1,016,611	$66,327	$135,671	$83,146	$53,559	$36,961	$112,760	$11,507	$499,931
Grade 2	—	—	17	2,963	1,163	1,978	753	6,874	17,354	38,028	30,351	10,695	9,710	40,707	4,904	151,749
Grade 3	—	—	12	—	—	66	—	78	3	3,905	27	266	476	2,621	—	7,298
Grade 4	—	—	—	13	28	69	866	976	349	—	921	539	—	436	307	2,552
Total other loans	883,501	30,094	27,051	24,091	20,085	16,920	22,797	1,024,539
Pegasus Bank
Total commercial real estate owner occupied loans									84,033	177,604	114,445	65,059	47,147	156,524	16,718	661,530
Commercial real estate non-owner occupied
Grade 1	77,749	71,121	38,632	29,364	13,934	42,795	85,867	359,462	95,260	227,302	147,192	62,169	61,402	137,491	18,024	748,840
Grade 2	19,119	32,094	4,321	20,939	3,942	7,285	76,104	163,804	16,345	59,541	44,838	37,862	19,357	43,884	4,657	226,484
Grade 3	—	—	—	—	—	1,331	—	1,331	7,453	—	3,412	214	1,607	865	—	13,551
Total Pegasus Bank	96,868	103,215	42,953	50,303	17,876	51,411	161,971	524,597
Total loans held for investment	$2,470,333	$1,241,465	$690,620	$465,014	$350,781	$673,255	$720,625	$6,612,093
Grade 4									—	—	50	37	—	598	—	685
Total commercial real estate non-owner occupied loans									119,058	286,843	195,492	100,282	82,366	182,838	22,681	989,560
Construction and development < 60 months
Grade 1									91,143	63,018	66,976	11,381	2,547	3,210	10,454	248,729
Grade 2									12,579	12,938	12,391	2,187	1,811	773	2,128	44,807
Grade 3									1,753	1,690	130	7	—	—	—	3,580
Grade 4									—	—	61	8	20	—	—	89
Total construction and development < 60 months									105,475	77,646	79,558	13,583	4,378	3,983	12,582	297,205
Construction residential real estate < 60 months
Grade 1									101,482	69,169	52	—	20	30	7,264	178,017
Grade 2									14,182	14,919	—	109	—	437	—	29,647
Grade 3									546	—	—	—	—	—	—	546
Total construction residential real estate < 60 months									116,210	84,088	52	109	20	467	7,264	208,210
Residential real estate first lien
Grade 1									134,782	188,553	109,336	69,907	54,107	154,974	—	711,659
Grade 2									22,669	25,098	16,385	19,237	10,187	42,381	—	135,957
Grade 3									1,102	1,809	2,526	901	1,360	4,832	—	12,530
Grade 4									49	511	442	1,149	934	2,326	—	5,411
Total residential real estate first lien									158,602	215,971	128,689	91,194	66,588	204,513	—	865,557
Residential real estate all other
Grade 1									9,847	16,428	11,139	8,009	5,157	15,276	28,321	94,177
Grade 2									746	3,263	1,743	1,325	1,137	2,367	53,510	64,091
Grade 3									272	140	410	248	718	376	1,042	3,206
Grade 4									14	211	—	579	15	652	345	1,816
Total residential real estate all other									10,879	20,042	13,292	10,161	7,027	18,671	83,218	163,290
Farmland
Grade 1									26,621	46,638	25,418	18,375	13,983	35,431	7,521	173,987
Grade 2									8,767	9,048	26,148	5,702	5,457	13,424	10,709	79,255
Grade 3									2,786	2,068	1,676	300	742	1,213	1,842	10,627
Grade 4									—	1,195	—	3,187	296	183	278	5,139
Total farmland									38,174	58,949	53,242	27,564	20,478	50,251	20,350	269,008
Commercial and agricultural non-real estate
Grade 1									190,653	135,726	105,770	64,491	54,567	54,870	220,348	826,425
Grade 2									38,938	47,478	29,481	11,780	3,885	18,985	68,353	218,900
Grade 3									4,900	5,500	1,706	12,010	1,858	639	21,708	48,321
Grade 4									262	1,783	1,555	599	811	1,299	5,822	12,131
Total commercial and agricultural non-real estate									234,753	190,487	138,512	88,880	61,121	75,793	316,231	1,105,777
Consumer non-real estate
Grade 1									110,171	116,215	64,985	27,641	9,497	4,018	7,084	339,611
Grade 2									9,362	9,659	4,641	2,833	1,099	1,653	287	29,534
Grade 3									229	405	787	290	154	147	3	2,015
Grade 4									14	67	180	58	19	55	4	397
Total consumer non-real estate									119,776	126,346	70,593	30,822	10,769	5,873	7,378	371,557
Oil and gas
Grade 1									53,326	115	59	66	—	3,444	33,676	90,686
Grade 2									10,051	3,347	69	—	—	—	9,419	22,886
Grade 3									16,887	—	—	—	—	—	—	16,887
Total oil and gas									80,264	3,462	128	66	—	3,444	43,095	130,459

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 $57.7 million provision~~

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist by identifying by portfolio segments, the applicable weighted average life and measuring the allowance for credit losses using the vintage loss analysis adjusted for qualitative factors. The weighted average lives of the Company’s loans segments are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the ~~first nine months of 2020 utilizing~~year ended December 31, 2020.

The decrease in the newly adopted CECL methodology, a significant increase from the first nine months of 2019. The increase resulted primarily from the anticipated impact on our loan portfolio resulting from the economic outlook related to the COVID-19 pandemic and the decline in energy prices and to a lesser degree, loan growthallowance for credit loss during the ~~first nine months~~second quarter of ~~2020. Prolonged low energy prices will not only have~~2021 was primarily driven by a ~~direct impact~~reversal of provision during the quarter based on sustained improvements in the ~~energy portfolio; it will have an indirect effect on~~economy, both nationally and in Oklahoma, which reduced the ~~economies~~amount of ~~Oklahoma and~~expected credit loss within the ~~Dallas, Texas market, including higher unemployment,~~loan portfolio. This reduction was partially offset by additional allowance for credit loss required by newly acquired loans purchased with ~~a residual effect on land values and real estate prices.~~credit deterioration.

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		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		Balance at beginning of period		Initial allowance on loans purchased with credit deterioration		Charge- offs			Recoveries		Net charge-offs			(Benefit from) /Provision for credit losses on loans			Balance at end of period
	(Dollars in thousands)																				(Dollars in thousands)
Three Months Ended September 30, 2020
Three Months Ended June 30, 2021
BancFirst
Real estate:
Commercial real estate owner occupied	$	6,630	$	—		$	—	$	(24	)	$	1	$	(23	)	$	1,287		$	7,894	$	6,595	$	987	$	—		$	1	$	1		$	(828	)	$	6,755
Commercial real estate non-owner occupied		9,483		—			—		(87	)		—		(87	)		5,508			14,904		16,955		633		(758	)		—		(758	)		(2,340	)		14,490
Construction and development < 60 months		1,755		—			—		—			3		3			(169	)		1,589		2,743		173		—			2		2			(25	)		2,893
Construction residential real estate < 60 months		2,259		—			—		(368	)		—		(368	)		769			2,660		983		—		—			—		—			(94	)		889
Residential real estate first lien		8,553		—			—		(133	)		5		(128	)		1,839			10,264		2,592		117		(9	)		12		3			93			2,805
Residential real estate all other		2,720		—			—		(84	)		1		(83	)		219			2,856		1,873		—		(30	)		1		(29	)		97			1,941
Farmland		2,511		—			—		(3	)		—		(3	)		1,902			4,410		3,077		643		—			1		1			(6	)		3,715
Commercial and agricultural non-real estate		44,505		—			—		(594	)		13		(581	)		5,518			49,442		32,685		4,711		(3,433	)		125		(3,308	)		(2,473	)		31,615
Consumer non-real estate		4,714		—			—		(195	)		43		(152	)		539			5,101		3,256		8		(209	)		86		(123	)		174			3,315
Oil and gas																						12,131		—		—			—		—			(4,314	)		7,817
Other loans		2,513		—			—		(100	)		8		(92	)		800			3,221		3,190		—		(9	)		—		(9	)		(43	)		3,138
Pegasus Bank		3,857		—			—		(600	)		—		(600	)		528			3,785		4,780		—		—			—		—			(190	)		4,590
Total	$	89,500	$	—		$	—	$	(2,188	)	$	74	$	(2,114	)	$	18,740		$	106,126	$	90,860	$	7,272	$	(4,448	)	$	228	$	(4,220	)	$	(9,949	)	$	83,963
Nine Months Ended September 30, 2020
Six Months Ended June 30, 2021
BancFirst
Real estate:
Commercial real estate owner occupied	$	5,625	$	(2,806	)	$	432	$	(137	)	$	2	$	(135	)	$	4,778		$	7,894	$	7,035	$	987	$	—		$	1	$	1		$	(1,268	)	$	6,755
Commercial real estate non-owner occupied		8,358		(5,507	)		—		(87	)		—		(87	)		12,140			14,904		11,842		633		(796	)		—		(796	)		2,811			14,490
Construction and development < 60 months		2,214		(1,056	)		—		(59	)		6		(53	)		484			1,589		2,560		173		—			5		5			155			2,893
Construction residential real estate < 60 months		1,933		(778	)		—		(397	)		—		(397	)		1,902			2,660		627		—		—			—		—			262			889
Residential real estate first lien		8,692		(3,831	)		7		(351	)		11		(340	)		5,736			10,264		2,570		117		(52	)		27		(25	)		143			2,805
Residential real estate all other		2,767		(1,408	)		—		(116	)		29		(87	)		1,584			2,856		2,230		—		(46	)		4		(42	)		(247	)		1,941
Farmland		2,821		(1,408	)		1		(3	)		—		(3	)		2,999			4,410		3,136		643		—			1		1			(65	)		3,715
Commercial and agricultural non-real estate		15,345		11,849			62		(968	)		96		(872	)		23,058			49,442		32,400		4,711		(3,537	)		151		(3,386	)		(2,110	)		31,615
Consumer non-real estate		3,252		(622	)		—		(751	)		157		(594	)		3,065			5,101		3,377		8		(622	)		198		(424	)		354			3,315
Oil and gas																						17,851		—		—			—		—			(10,034	)		7,817
Other loans		2,632		(116	)		—		(100	)		10		(90	)		795			3,221		3,182		—		(61	)		—		(61	)		17			3,138
Pegasus Bank		599		2,488			—		(841	)		424		(417	)		1,115			3,785		4,556		—		—			1		1			33			4,590
Total	$	54,238	$	(3,195	)	$	502	$	(3,810	)	$	735	$	(3,075	)	$	57,656		$	106,126	$	91,366	$	7,272	$	(5,114	)	$	388	$	(4,726	)	$	(9,949	)	$	83,963

	Allowance for Credit Losses														Allowance for Credit Losses
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provision for credit losses on loans		Balance at end of period		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 /(benefit from) credit losses on loans			Balance at end of period
	(Dollars in thousands)														(Dollars in thousands)
Three Months Ended September 30, 2019
Three Months Ended June 30, 2020
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,887	$	(2	)	$	1	$	(1	)	$	72	$	6,958
Non-residential real estate other		11,287		(35	)		33		(2	)		478		11,763
Residential real estate permanent mortgage		3,325		(63	)		2		(61	)		97		3,361
Commercial real estate owner occupied															$	4,544	$	—		$	—	$	(113	)	$	1	$	(112	)	$	2,198		$	6,630
Commercial real estate non-owner occupied																5,935		—			—		—			—		—			3,548			9,483
Construction and development < 60 months																1,136		—			—		(56	)		3		(53	)		672			1,755
Construction residential real estate < 60 months																1,618		—			—		(28	)		—		(28	)		669			2,259
Residential real estate first lien																6,192		—			—		(66	)		4		(62	)		2,423			8,553
Residential real estate all other		11,721		(29	)		2		(27	)		507		12,201		2,292		—			—		(7	)		1		(6	)		434			2,720
Non-consumer non-real estate		15,232		(244	)		49		(195	)		347		15,384
Farmland																1,788		—			—		—			—		—			723			2,511
Commercial and agricultural non-real estate																33,993		—			—		(287	)		66		(221	)		264			34,036
Consumer non-real estate		3,234		(287	)		66		(221	)		261		3,274		3,385		—			—		(235	)		57		(178	)		1,507			4,714
Oil and gas																3,283		—			—		—			—		—			7,186			10,469
Other loans		2,449		—			9		9			189		2,647		2,751		—			—		—			—		—			(238	)		2,513
Acquired loans		973		(1,517	)		53		(1,464	)		767		276
Pegasus Bank		—		—			24		24			40		64		3,163		—			—		330			417		747			(53	)		3,857
Total	$	55,108	$	(2,177	)	$	239	$	(1,938	)	$	2,758	$	55,928	$	70,080	$	—		$	—	$	(462	)	$	549	$	87		$	19,333		$	89,500
Nine Months Ended September 30, 2019
Six Months Ended June 30, 2020
BancFirst
Real estate:
Non-residential real estate owner occupied	$	6,328	$	(11	)	$	2	$	(9	)	$	639	$	6,958
Non-residential real estate other		11,027		(57	)		34		(23	)		759		11,763
Residential real estate permanent mortgage		3,261		(130	)		11		(119	)		219		3,361
Commercial real estate owner occupied															$	5,625	$	(2,806	)	$	432	$	(113	)	$	1	$	(112	)	$	3,491		$	6,630
Commercial real estate non-owner occupied																8,358		(5,507	)		—		—			—		—			6,632			9,483
Construction and development < 60 months																2,214		(1,056	)		—		(59	)		3		(56	)		653			1,755
Construction residential real estate < 60 months																1,933		(778	)		—		(29	)		—		(29	)		1,133			2,259
Residential real estate first lien																8,692		(3,831	)		7		(218	)		6		(212	)		3,897			8,553
Residential real estate all other		10,673		(224	)		29		(195	)		1,723		12,201		2,767		(1,408	)		—		(32	)		28		(4	)		1,365			2,720
Non-consumer non-real estate		13,151		(401	)		201		(200	)		2,433		15,384
Farmland																2,821		(1,408	)		1		—			—		—			1,097			2,511
Commercial and agricultural non-real estate																13,462		13,195			62		(374	)		83		(291	)		7,608			34,036
Consumer non-real estate		3,065		(569	)		175		(394	)		603		3,274		3,252		(622	)		—		(556	)		114		(442	)		2,526			4,714
Oil and gas																1,883		(1,346	)		—		—			—		—			9,932			10,469
Other loans		2,423		—			87		87			137		2,647		2,632		(116	)		—		—			2		2			(5	)		2,513
Acquired loans		1,461		(1,713	)		206		(1,507	)		322		276
Pegasus Bank		—		—			24		24			40		64		599		2,488			—		(241	)		424		183			587			3,857
Total	$	51,389	$	(3,105	)	$	769	$	(2,336	)	$	6,875	$	55,928	$	54,238	$	(3,195	)	$	502	$	(1,622	)	$	661	$	(961	)	$	38,916		$	89,500

The Company has previously purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The credit-deteriorated loans purchased ~~credit deteriorated loans for~~during the ~~period are~~six-month periods ended June 30, 2021 and June 30, 2020 were as follows:

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, 2021 and 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								Collateral Type
	Real Estate		Business Assets		Energy Reserves		Other Assets		Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation
	(Dollars in thousands)								(Dollars in thousands)
As of September 30, 2020
As of June 30, 2021
BancFirst
Real estate:
Commercial real estate owner occupied	$	1,508	$	—	$	—	$	—	$	645	$	—	$	—	$	—	$	645	$	176
Commercial real estate non-owner occupied		20,477		—		—		—		—		—		—		—		—		—
Construction and development < 60 months		14		—		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months		—		—		—		—		—		—		—		—		—		—
Residential real estate first lien		1,279		—		—		—		806		—		—		—		806		158
Residential real estate all other		759		—		—		—		650		—		—		—		650		568
Farmland		3,814		—		—		—		3,215		—		—		—		3,215		1,123
Commercial and agricultural non-real estate		—		2,759		28,256		4,856		—		5,211		—		5,188		10,399		778
Consumer non-real estate		—		—		—		141		—		—		—		22		22		4
Oil and gas										—		—		—		—		—		—
Other loans		—		12		—		—		—		15		—		—		15		15
Pegasus Bank		1,257		—		—		—		—		—		—		—		—		—
Total collateral-dependent loans held for investment	$	29,108	$	2,771	$	28,256	$	4,997	$	5,316	$	5,226	$	—	$	5,210	$	15,752	$	2,822

									Collateral Type
									Real Estate		Business Assets		Energy Reserves		Other Assets		Total		Specific Allocation
									(Dollars in thousands)
As of December 31, 2020
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

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

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

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(Dollars in thousands)							(Dollars in thousands)
As of September 30, 2020
As of June 30, 2021
Core deposit intangibles	$	35,561	$	(16,366	)	$	19,195	$	30,849	$	(12,120	)	$	18,729
Customer relationship intangibles		3,350		(2,631	)		719		3,350		(2,796	)		554
Total	$	38,911	$	(18,997	)	$	19,914	$	34,199	$	(14,916	)	$	19,283
As of December 31, 2019
As of December 31, 2020
Core deposit intangibles	$	35,856	$	(14,131	)	$	21,725	$	33,411	$	(15,076	)	$	18,335
Customer relationship intangibles		3,391		(2,508	)		883		3,350		(2,686	)		664
Total	$	39,247	$	(16,639	)	$	22,608	$	36,761	$	(17,762	)	$	18,999

~~The Company acquired Citizens on March 5, 2020, which added $1.3 million in goodwill.~~ 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, ~~2019.~~2020.

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.

Rent expense for all operating leases, including those rented on a monthly or temporary basis, totaled approximately ~~$504,000~~$462,000 and ~~$392,000~~approximately $453,000 for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~September~~June 30, ~~2019,~~2020, respectively. Rent expense for all operating leases, including those rented on a monthly or temporary basis, totaled approximately ~~$1.4 million~~$966,000 and ~~$1.2 million~~$916,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~September~~June 30, ~~2019,~~2020, respectively.

As of ~~September~~June 30, ~~2020,~~2021, right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled ~~$4.3~~$3.8 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled ~~$4.2~~$3.7 million. There have been no significant changes in our expected future minimum lease payments since December 31, ~~2019.~~2020. The future minimum lease payments are disclosed in Note (20) to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. As of ~~September~~June 30, ~~2020,~~2021, our operating leases have a weighted-average remaining lease term of ~~3.4~~3.3 years and a weighted-average discount rate of ~~3.3~~2.8 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 balance sheet.

	September 30, 2020			June 30, 2021
	(Dollars in thousands)			(Dollars in thousands)
2020 (three months)	$	325
2021		1,242
2021 (six months)				$	703
2022		1,002			1,212
2023		569			708
2024		345			345
2025					286
Thereafter		1,165			893
Total lease payments		4,648			4,147
Less imputed Interest		(457	)		(497	)
Operating lease liability	$	4,191		$	3,650

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 balance sheet as premises and equipment. The Company had operating lease revenue of $1.3 million and ~~$1.6~~$1.4 million for the three months ended ~~September~~June 30, ~~2020~~2021 and ~~September~~June 30, ~~2019,~~2020, respectively. The Company had operating lease revenue of ~~$4.1~~$2.7 million and ~~$4.7~~$2.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~September~~June 30, ~~2019,~~2020, respectively. Lease revenue is included in occupancy, net on the consolidated statement of comprehensive income.

The Company does not have operating leases that extend beyond ~~2030.~~2031. The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:

In January 2004, the Company established BFC Capital Trust II (“BFC II”), a trust formed under the Delaware Business Trust Act. The Company owns all of the common securities of BFC II. In February 2004, BFC II issued $25 million of aggregate liquidation amount of 7.20% Cumulative Trust Preferred Securities (the “Cumulative Trust Preferred Securities”) to other investors. In March 2004, BFC II issued an additional $1 million in Cumulative Trust Preferred Securities through the execution of an over-allotment option. The proceeds from the sale of the Cumulative Trust Preferred Securities and the common securities of BFC II were invested in $26.8 million of 7.20% Junior Subordinated Debentures of the Company. Interest payments on the $26.8 million of 7.20% Junior Subordinated Debentures are payable January 15, April 15, July 15 and October 15 of each year. Such interest payments may be deferred for up to twenty consecutive quarters. The stated maturity date of the $26.8 million of 7.20% Junior Subordinated Debentures is March 31, 2034, but they are subject to mandatory redemption pursuant to optional prepayment terms. The Cumulative Trust Preferred Securities represent an undivided interest in the $26.8 million of 7.20% Junior Subordinated Debentures and are guaranteed by the Company. During any deferral period or during any event of default, the Company may not declare or pay any dividends on any of its capital stock. The Cumulative Trust Preferred Securities were callable at par, in whole or in part, after March 31, 2009.

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. The sale of the Subordinated Notes was pursuant to a Subordinated Note Purchase Agreement entered into with each of the investors. The Subordinated Notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. The net proceeds to the Company from the sale of the Subordinated Notes was approximately $59.15 million after deducting commissions and offering expenses of $850,000. The Company expects to use the proceeds from the sale of the Subordinated Notes for general corporate purposes. The Subordinated Notes will initially bear interest at a fixed rate of 3.50% per annum, from and including June 17, 2021 to but excluding June 30, 2031, payable semi-annually in arrears on June 30 and December 31 of each year, commencing December 31, 2021. Then, from and including June 30, 2031, to but excluding the maturity date, the Subordinated Notes will bear interest at a floating rate equal to the benchmark (initially, three-month term SOFR), reset quarterly, plus a spread of 229 basis points, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Subordinated Notes mature on June 30, 2036.

The Company may, at its option, beginning with the interest payment date of June 30, 2031, and on any scheduled interest payment date thereafter, redeem the Subordinated Notes, in whole or in part. In addition, the Company may redeem all, but not less than all, of the Subordinated Notes at any time upon the occurrence of a “Tier 2 Capital Event,” a “Tax Event” or an “Investment Company Event” (each as defined in the Subordinated Notes). Any such redemption is subject to obtaining the prior approval of the Board of Governors of the Federal Reserve System (or its designee). The redemption price with respect to any such redemption will be equal to 100% of the principal amount of the Subordinated Note, or portion thereof, to be redeemed, plus accrued but unpaid interest, if any, thereon to, but excluding, the redemption date.

The Company has had a nonqualified incentive stock option plan the BancFirst Corporation Stock Option Plan (the ~~“BancFirst ISOP”~~“Employee Plan”) since May 1986. At ~~September~~June 30, ~~2020,~~2021, there were ~~321,500~~275,000 shares available for future grants. The ~~BancFirst ISOP~~Employee Plan will terminate on December 31, 2024, if not extended. 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 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 ~~“BancFirst~~“Non-Employee Directors’ ~~Stock Option~~ Plan”) since June 1999. Each non-employee director is granted an option for 10,000 shares. At ~~September~~June 30, ~~2020,~~2021, there were ~~30,000~~50,000 shares available for future grants. The ~~BancFirst~~Non-Employee Directors’ ~~Stock Option~~ Plan will terminate on December 31, 2024, if not extended. The options 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. 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 currently uses newly issued shares for stock option exercises, 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 in cash on a limited basis at the discretion of the Company. During the six months ended June 30, 2021, the Company had cash settlements for 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 ~~BancFirst ISOP~~Employee Plan and the ~~BancFirst~~Non-Employee Directors’ ~~Stock Option~~ Plan:

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

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
	(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)
Total intrinsic value of options exercised	$	414	$	87	$	1,140	$	991	$	557	$	337	$	7,860	$	726
Cash received from options exercised		323		99		827		710		413		303		4,379		504
Tax benefit realized from options exercised		105		22		290		252		142		86		2,002		185

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 September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
	(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)				(Dollars in thousands)
Stock-based compensation expense	$	433	$	347	$	1,265	$	888	$	473	$	406	$	1,049	$	832
Tax benefit		110		88		322		226		114		103		252		212
Stock-based compensation expense, net of tax	$	323	$	259	$	943	$	662	$	359	$	303	$	797	$	620

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:

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:

	Nine Months Ended September 30,				Six Months Ended June 30,
	2020		2019		2021		2020
Weighted average grant-date fair value per share of options granted	$	11.70	$	13.31	$	23.74	$	10.63
Risk-free interest rate	0.64 to 1.13%		1.55 to 2.76%		1.34 to 1.74%		0.66 to1.13%
Dividend yield	2.00%		2.00%		2.00%		2.00%
Stock price volatility	22.84 to 35.94%		22.93 to 23.63%		35.55 to 36.01%		22.84 to 33.56%
Expected term	10 Yrs		10 Yrs		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.

The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the ~~“BancFirst Deferred~~“Deferred Stock Compensation Plan”) since May 1999. As of ~~September~~June 30, ~~2020,~~2021, there are ~~24,982~~40,000 shares available for future issuance under the ~~BancFirst~~ Deferred Stock Compensation Plan. The ~~BancFirst~~ 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 ~~1,307~~2,161 and ~~9,542~~1,307 shares of common stock distributed from the ~~BancFirst~~ Deferred Stock Compensation Plan during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~September~~June 30, ~~2019,~~2020, respectively.

	September 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Accumulated stock units		152,150		143,362		150,118		148,278
Average price	$	28.13	$	27.17	$	29.61	$	28.57

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,~~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.

	Nine Months Ended September 30,				Six Months Ended June 30,
	2020		2019		2021		2020
Number of shares repurchased		59,284		—		—		59,284
Average price of shares repurchased	$	52.26	$	—	$	—	$	52.26
Shares remaining to be repurchased		62,782		148,736		62,782		62,782

The Company, BancFirst and Pegasus Bank 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 the Company’s, BancFirst’s and Pegasus Bank’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 financial statements. Management believes that as of ~~September~~June 30, ~~2020,~~2021, the Company, BancFirst and Pegasus Bank 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						Required						To Be Well
				For Capital			With			Capitalized Under						For Capital			With			Capitalized Under
				Adequacy			Capital Conservation			Prompt Corrective						Adequacy			Capital Conservation			Prompt Corrective
	Actual			Purposes			Buffer			Action Provisions			Actual			Purposes			Buffer			Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio	Amount		Ratio
	(Dollars in thousands)												(Dollars in thousands)
As of September 30, 2020:
As of June 30, 2021:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	971,248	15.23%	$	510,168	8.00%	$	669,595	10.50%	N/A		N/A	$	1,123,056	17.35%	$	517,721	8.00%	$	679,508	10.50%	N/A		N/A
BancFirst		878,442	15.10%		465,403	8.00%		610,841	10.50%	$	581,754	10.00%		954,496	16.23%		470,400	8.00%		617,400	10.50%	$	588,000	10.00%
Pegasus Bank		68,927	12.52%		44,046	8.00%		57,811	10.50%		55,058	10.00%		76,186	12.61%		48,317	8.00%		63,416	10.50%		60,396	10.00%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	865,208	13.57%	$	286,969	4.50%	$	446,397	7.00%	N/A		N/A	$	956,969	14.79%	$	291,218	4.50%	$	453,006	7.00%	N/A		N/A
BancFirst		785,357	13.50%		261,789	4.50%		407,227	7.00%	$	378,140	6.50%		860,924	14.64%		264,600	4.50%		411,600	7.00%	$	382,200	6.50%
Pegasus Bank		64,861	11.78%		24,776	4.50%		38,541	7.00%		35,788	6.50%		71,113	11.77%		27,178	4.50%		42,277	7.00%		39,257	6.50%
Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	891,208	13.98%	$	382,626	6.00%	$	542,053	8.50%	N/A		N/A	$	982,969	15.19%	$	388,291	6.00%	$	550,078	8.50%	N/A		N/A
BancFirst		805,357	13.84%		349,052	6.00%		494,491	8.50%	$	465,403	8.00%		880,924	14.98%		352,800	6.00%		499,800	8.50%	$	470,400	8.00%
Pegasus Bank		64,861	11.78%		33,035	6.00%		46,799	8.50%		44,046	8.00%		71,113	11.77%		36,238	6.00%		51,337	8.50%		48,317	8.00%
Tier 1 Capital
(to Total Assets)-
BancFirst Corporation	$	891,208	9.43%	$	377,862	4.00%	N/A		N/A	N/A		N/A	$	982,969	9.23%	$	425,962	4.00%	N/A		N/A	N/A		N/A
BancFirst		805,357	9.28%		347,274	4.00%	N/A		N/A	$	434,092	5.00%		880,924	9.13%		385,803	4.00%	N/A		N/A	$	482,254	5.00%
Pegasus Bank		64,861	8.65%		30,003	4.00%	N/A		N/A		37,504	5.00%		71,113	7.15%		39,786	4.00%	N/A		N/A		49,733	5.00%

As of ~~September~~June 30, ~~2020,~~2021, the most recent notification from the Federal Reserve Bank of Kansas City and the FDIC categorized BancFirst and Pegasus Bank as “well capitalized” under the prompt corrective action provisions. The Common Equity Tier 1 Capital of the Company, BancFirst and Pegasus Bank 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 the Company, BancFirst and Pegasus Bank 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. There are no conditions or events since the most recent notification of BancFirst and Pegasus Bank’s capital category that management believes would materially change its category under capital requirements existing as of the report date.

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 0 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 ~~the second quarter of~~ 2020 and 2021 are included in the calculation of the Company’s leverage ratio as of ~~September~~June 30, ~~2020~~2021 as the Company did not utilize the PPP Facility for funding purposes.

~~As discussed in Note 1 - Significant Accounting Policies, in connection with the adoption of ASC 326,~~On June 17, 2021, the Company ~~recognized an after-tax cumulative effect reduction~~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 ~~retained earnings totaling $2.3 million. In February 2019, the federal~~qualify as Tier 2 capital under bank regulatory agencies issued a final rule (the “2019 CECL Rule”) that revised certain capital regulations to account for changes to credit loss accounting under U.S. GAAP. The 2019 CECL Rule included a transition option that allows banking organizations to phase in, over a three-year period, the day-one adverse effects of CECL on their regulatory capital ratios (three-year transition option). In March 2020, the federal bank regulatory agencies issued an interim final rule that maintains the three-year transition option of the 2019 CECL Rule and also provides banking organizations that were required under U.S. GAAP (as of January 2020) to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company elected not to adopt the five-yearguidelines. ~~transition option.~~

	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 September 30, 2020
Three Months Ended June 30, 2021
Basic
Income available to common stockholders	$	20,890		32,668,789	$	0.64	$	48,192		32,779,227	$	1.47
Dilutive effect of stock options		—		500,149				—		626,696
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	20,890		33,168,938	$	0.63	$	48,192		33,405,923	$	1.45
Three Months Ended September 30, 2019
Three Months Ended June 30, 2020
Basic
Income available to common stockholders	$	33,368		32,641,902	$	1.02	$	20,730		32,651,262	$	0.64
Dilutive effect of stock options		—		685,311				—		424,231
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	33,368		33,327,213	$	1.00	$	20,730		33,075,493	$	0.63
Nine Months Ended September 30, 2020
Six Months Ended June 30, 2021
Basic
Income available to common stockholders	$	64,228		32,666,554	$	1.97	$	90,712		32,768,102	$	2.77
Dilutive effect of stock options		—		523,740				—		639,591
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	64,228		33,190,294	$	1.94	$	90,712		33,407,693	$	2.72
Nine Months Ended September 30, 2019
Six Months Ended June 30, 2020
Basic
Income available to common stockholders	$	99,372		32,627,924	$	3.04	$	43,338		32,665,425	$	1.33
Dilutive effect of stock options		—		686,374				—		531,996
Diluted
Income available to common stockholders plus assumed exercises of stock options	$	99,372		33,314,298	$	2.98	$	43,338		33,197,421	$	1.31

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:

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:

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.

~~Securities~~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.

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)
September 30, 2020
Securities available for sale:
June 30, 2021
Debt securities available for sale:
U.S. Treasury	$	511,693	$	—	$	—	$	511,693	$	471,842	$	—	$	—	$	471,842
U.S. federal agencies		—		20,789		—		20,789		—		25,595		—		25,595
Mortgage-backed securities		—		16,138		—		16,138		—		38,769		—		38,769
States and political subdivisions		—		32,120		516		32,636		—		10,781		320		11,101
Asset backed securities		—		—		12,714		12,714		—		13,476		—		13,476

December 31, 2019
Securities available for sale:
December 31, 2020
Debt securities available for sale:
U.S. Treasury	$	414,449	$	—	$	—	$	414,449	$	475,236	$	—	$	—	$	475,236
U.S. federal agencies		—		23,024		—		23,024		—		19,638		—		19,638
Mortgage-backed securities		—		17,005		—		17,005		—		15,696		—		15,696
States and political subdivisions		—		22,531		—		22,531		—		28,793		155		28,948
Asset backed securities		—		—		12,714		12,714		—		—		12,714		12,714

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

	Nine Months Ended September 30,			Twelve Months Ended December 31,			Six Months Ended June 30,			Twelve Months Ended December 31,
	2020			2019			2021			2020
	(Dollars in thousands)						(Dollars in thousands)
Balance at the beginning of the year	$	12,714		$	13,443		$	12,869		$	12,714
Transfers from level 2		1,643			—
Transfers (to)/from level 2								(12,714	)		1,643
Purchases								240			—
Settlements		(1,117	)		(695	)		(75	)		(1,473	)
Total unrealized gains/(losses)		(10	)		(34	)
Total unrealized losses								—			(15	)
Balance at the end of the period	$	13,230		$	12,714		$	320		$	12,869

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 ~~nine~~six months ended ~~September~~June 30, 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. During the year ended December 31, 2020, the Company transferred debt securities from Level 2 to Level 3 due to a review of the pricing models that determined some state and political subdivisions bonds to be Level 3. ~~During the twelve months ended December 31, 2019, the Company did 0t transfer any securities between levels in the fair value hierarchy.~~

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. ~~Beginning January 1, 2018, upon adoption of ASU 2016-01, these~~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 management 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.~~basis during the period presented. The fair value represents end of period values, which approximate fair value measurements that occurred on various measurement dates throughout the 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 September 30, 2020
As of and for the Year-to-date Period Ended June 30, 2021
Equity securities	$	9,755	$	21,548
Collateral dependent loans		38,625		867
Repossessed assets		186		50
Other real estate owned		3,924		8,009
As of and for the Year-to-date Period Ended December 31, 2019
As of and for the Year-to-date Period Ended December 31, 2020
Equity securities	$	10,121	$	21,203
Collateral dependent loans		45,687		11,347
Repossessed assets		465		291
Other real estate owned		3,024		32,066

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.

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

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.

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. ~~The Company has an agreement to sell approximately $21.5 million of its loans in Hugo, OK to AmeriState Bank. These loans are included in~~ Loans held ~~for sale. 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. At December 31, 2020, the Company’s principal subsidiary bank, BancFirst, had approximately $21.6 million in loans held for sale at its Hugo, Oklahoma branch that were sold to AmeriState Bank in Atoka, Oklahoma in the first quarter of 2021.

To determine the fair value of loans, 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 including PPP~~ 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.

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.

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

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

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:

	September 30,				December 31,				June 30,				December 31,
	2020				2019				2021				2020
	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	$	1,835,524	$	1,835,524	$	1,868,281	$	1,868,281	$	3,641,398	$	3,641,398	$	1,616,912	$	1,616,912
Federal funds sold		—		—		1,000		1,000
Securities held for investment		66		69		1,403		1,403
Debt securities held for investment										43		45		59		62
Loans held for sale		48,601		48,601		11,001		11,001		16,032		16,032		53,719		53,719
Level 3 inputs:
Securities held for investment		2,905		2,942		500		500
Debt securities held for investment										2,945		2,945		2,905		2,922
Loans, net of allowance for credit losses		6,505,967		6,560,188		5,607,905		5,625,005		6,107,267		6,108,907		6,303,140		6,347,803
FINANCIAL LIABILITIES
Level 2 inputs:
Deposits		8,495,891		8,512,546		7,483,635		7,497,429		9,728,389		9,817,785		8,064,704		8,084,695
Short-term borrowings		300		300		1,100		1,100		3,100		3,100		1,100		1,100
Junior subordinated debentures		26,804		30,771		26,804		29,324
Subordinated debt										85,959		89,270		26,804		30,535
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Loan commitments				3,091				2,832				3,313				3,115
Letters of credit				518				485				567				722

The Company has 0 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 0t considered to be significant to the Company at ~~September~~June 30, ~~2020~~2021 or December 31, ~~2019.~~2020.

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 5 principal business units are metropolitan banks, community banks, Pegasus Bank, other financial services and executive, operations and support. Metropolitan banks, community banks and Pegasus Bank offer traditional banking products such as commercial and retail lending and a full line of deposit accounts. Metropolitan banks consist of banking locations in the metropolitan Oklahoma City and Tulsa areas. Community banks consist of banking locations in communities throughout Oklahoma. Pegasus Bank consists of banking locations in the Dallas metropolitan area. 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 five business units are as follows:

	Metropolitan Banks		Community Banks		Pegasus Bank		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated		Metropolitan Banks		Community Banks		Pegasus Bank		Other Financial Services		Executive, Operations & Support			Eliminations			Consolidated
	(Dollars in thousands)																(Dollars in thousands)
Three Months Ended September 30, 2020
Three Months Ended June 30, 2021
Net interest income	$	20,476	$	43,369	$	5,078	$	6,816	$	(104	)	$	217		$	75,852	$	19,848	$	45,024	$	5,808	$	11,457	$	9		$	217		$	82,363
Noninterest income		4,735		15,149		379		10,882		25,969			(22,539	)		34,575		3,669		16,197		355		10,913		62,025			(48,541	)		44,618
Income before taxes		6,669		18,257		1,429		3,819		17,158			(21,728	)		25,604		17,602		36,514		1,947		5,220		49,790			(48,166	)		62,907

Three Months Ended September 30, 2019
Three Months Ended June 30, 2020
Net interest income	$	21,955	$	44,707	$	2,954	$	1,654	$	1,017		$	—		$	72,287	$	22,310	$	43,917	$	4,976	$	5,905	$	100		$	—		$	77,208
Noninterest income		4,862		16,823		109		10,916		39,640			(36,723	)		35,627		4,571		13,841		121		9,328		25,774			(21,553	)		32,082
Income before taxes		15,670		29,710		1,404		6,239		25,882			(35,940	)		42,965		3,613		15,532		1,345		7,786		18,232			(21,202	)		25,306

Nine Months Ended September 30, 2020
Six Months Ended June 30, 2021
Net interest income	$	64,970	$	131,784	$	15,662	$	14,304	$	196		$	217		$	227,133	$	39,181	$	87,794	$	11,167	$	21,339	$	(398	)	$	486		$	159,569
Noninterest income		14,006		44,843		631		31,100		79,226			(68,004	)		101,802		8,813		31,173		739		22,488		111,756			(90,416	)		84,553
Income before taxes		20,695		58,225		4,372		17,364		44,793			(66,289	)		79,160		31,526		66,283		3,592		11,171		92,130			(89,617	)		115,085

Nine Months Ended September 30, 2019
Six Months Ended June 30, 2020
Net interest income	$	64,746	$	132,889	$	2,954	$	4,236	$	3,157		$	—		$	207,982	$	44,494	$	88,415	$	10,584	$	7,488	$	300		$	—		$	151,281
Noninterest income		13,706		47,951		109		30,894		113,078			(104,033	)		101,705		9,271		29,694		252		20,218		53,257			(45,465	)		67,227
Income before taxes		45,905		87,796		1,404		16,310		78,495			(102,103	)		127,807		14,026		39,968		2,943		13,545		27,635			(44,561	)		53,556

Total Assets:
September 30, 2020	$	2,952,325	$	5,718,312	$	761,505	$	809,354	$	487,192		$	(1,109,820	)	$	9,618,868
December 31, 2019		2,806,021		4,998,247		738,351		102,442		950,920			(1,030,223	)		8,565,758
June 30, 2021																	$	3,247,686	$	6,572,642	$	966,809	$	113,126	$	1,437,732		$	(1,322,708	)	$	11,015,287
December 31, 2020																		2,729,886		5,527,611		919,572		137,122		1,073,507			(1,175,341	)		9,212,357

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. ~~Capital expenditures are generally charged to the business unit using the asset.~~

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 ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 and results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 should be read in conjunction with our consolidated financial statements and notes to the financial statements for the year ended December 31, ~~2019,~~2020, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the ~~2019~~2020 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:

~~Since the latter half of the first quarter of 2020, the~~The COVID-19 pandemic and actions taken in response to it have negatively impacted the global economy and all financial ~~markets. Since~~markets since March 31, ~~2020, these conditions and the related financial impact have continued and, in some cases, worsened. The Company believes that it is premature to determine the magnitude of the impact at this point.~~2020. Although the Company is not able to estimate the impact of the COVID-19 pandemic and the resultant economic circumstances on a long-term basis at this time, the COVID-19 pandemic could materially affect the Company’s financial and operational results. ~~See Item 1.A. Risk Factors for further discussion.~~

The Company is closely monitoring its loan portfolio for effects related to COVID-19. The decline in economic activity as a result of the pandemic has caused a sharp decline in crude oil prices since February 2020. This decline has negatively impacted the oil and gas industry and the overall economies of our Oklahoma and Dallas, Texas markets and is expected to cause further worsening conditions of energy companies, oilfield services companies, related businesses and overall economic activitiesSee Item 1.A. Risk Factors in the Company’s ~~primary markets. Prolonged or heightened pricing pressure~~Annual Report on ~~oil and gas could lead to increased credit stress in~~Form 10-K for the ~~Company’s energy portfolio, increased losses associated with that portfolio and weaker demand~~year ended December 31, 2020, for ~~energy lending, lower borrowing needs, negative impact on construction and real estate related to energy, and a number of other potential impacts that are difficult to isolate or quantify.~~

~~If the negative impacts due to COVID-19 continue coupled with low energy prices, it is possible that the Company’s goodwill could become impaired in future periods.~~further discussion.

~~BancFirst Corporation’s~~The Company’s net income for the ~~third~~second quarter of ~~2020~~2021 was ~~$20.9~~$48.2 million, compared to ~~$33.4~~$20.7 million for the ~~third~~second quarter of ~~2019.~~2020. Diluted net income per common share was ~~$0.63~~$1.45 and ~~$1.00~~$0.63 for the ~~third~~second quarter of ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~results~~Company recorded a net benefit from reversal of provisions for credit losses of $9.9 million for the ~~third~~second quarter of ~~2020 were negatively impacted by~~2021, compared to a ~~higher~~ provision for credit ~~losses. The third~~losses of $19.3 million for the second quarter of ~~2020 includes the net income of Pegasus Bank~~2020. Also included in ~~Dallas, Texas, which was acquired on August 15, 2019, and the~~noninterest income and noninterest expense were a purchase gain and acquisition related expenses ~~associated with~~from the purchase ~~of certain assets~~ and assumption transaction with The First National Bank and Trust Company of ~~certain liabilities on March 5, 2020, from The Citizens State Bank~~Vinita, Oklahoma, which resulted in a net benefit of ~~Okemah.~~approximately $2.0 million.

Net income was ~~$64.2~~$90.7 million, or ~~$1.94~~$2.72 diluted earnings per share, for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to net income of ~~$99.4~~$43.3 million, or ~~$2.98~~$1.31 diluted earnings per share, for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

The Company’s net interest income for the ~~third~~second quarter of 2021 increased to $82.4 million, compared to $77.2 million for the second quarter of 2020, ~~increased~~due primarily to ~~$75.9~~$12.0 million ~~compared to $72.3 million for the third quarter of 2019.~~in fee income from Paycheck Protection Program (PPP) loan forgiveness. The net interest margin for the quarter was ~~3.40%~~3.32%, compared to ~~3.89%~~3.54% a year ago. The Company’s provision for credit losses for the third quarter of 2020 was $18.7 million, compared to $2.8 million a year ago. The increase in the provision related to reserve build up for expected credit losses stemming from the COVID-19 pandemic and low energy prices. The Company had net charge-offs 0.03% of average loans, compared to 0.04% of average loans for the third quarter of 2019. Noninterest income for the second quarter of 2021 totaled ~~$34.6~~$44.6 million, compared to ~~$35.6~~$32.1 million ~~last year.~~for the second quarter of 2020. The ~~decrease~~increase in noninterest income iswas primarily due to the previously discussed purchase gain associated with The First National Bank and Trust Company of Vinita, Oklahoma, $2.2 million in rental income from other real estate property, and a $2.7 million increase in income from debit card interchange fees, which were partially offset by a $1.5 million decrease in ~~deposit charges resulting~~income from ~~lower economic activity.~~sweep fees. Noninterest expense for the second quarter ~~totaled $66.1~~of 2021 increased to $74.0 million, compared to ~~$62.2~~$64.7 million ~~last year. The increase in noninterest expenses was primarily~~for the second quarter of 2020, due to ~~salary increases in 2020~~approximately $3.2 million related to ~~annual merit increases~~other real estate property operating costs, the previously discussed acquisition related expenses and $1.3 million in net occupancy and depreciation primarily from the ~~acquisition of Pegasus Bank.~~Company’s new corporate headquarters. The Company’s effective tax rate was ~~18.4%~~23.4% for the second quarter of 2021 compared to ~~22.3%~~18.1% for the ~~third~~second quarter of ~~2019.~~2020.

At ~~September~~June 30, ~~2020,~~2021, the Company’s total assets were ~~$9.6~~$11.0 billion, an increase of ~~$1.1~~$1.8 billion from December 31, ~~2019. Debt securities~~2020. Loans totaled $6.2 billion, a decrease of ~~$596.9 million were up $105.3~~$241.0 million from December 31, ~~2019. Loans~~2020 due primarily to a net decrease of approximately $284 million in PPP loans and the sale of approximately $21 million of loans from the Company’s Hugo, Oklahoma branch along with pay downs on loans. The decrease in loans were partially offset by the Company’s purchase of approximately $195 million in loans, from the First National Bank and Trust Company of Vinita, Oklahoma. Deposits totaled ~~$6.7~~$9.7 billion, an increase of ~~$987.6 million from December 31, 2019. Deposits totaled $8.5 billion, an increase of $1.0~~$1.7 billion from the December 31, ~~2019~~2020 total. The increase in assets ~~loans~~ and deposits were primarily related to ~~the~~ ~~Paycheck Protection Program (PPP)~~PPP and other government stimulus payments. At ~~September~~June 30, ~~2020,~~2021, the Company had PPP loans held for investment of ~~$830.3~~$368.6 million, net of unamortized processing fees of ~~$22.5 million, and approximately $1.4 million in PPP loans held for sale.~~$16.6 million. The Company’s total stockholders’ equity at June 30, 2021 was ~~$1.0~~$1.1 billion, an increase of ~~$38.8~~$63.7 million over December 31, ~~2019.~~2020. Off-balance sheet sweep accounts totaled $2.6 billion at June 30, 2021 compared to $2.8 billion at December 31, 2020.

Nonaccrual loans represent ~~1.24%~~0.48% of total loans at ~~September~~June 30, ~~2020, up~~2021, down from ~~0.32%~~0.58% at ~~year-end 2019.~~December 31, 2020. Net charge-offs for the quarter were 0.06% of average loans for the second quarter of 2021, compared to none in the second quarter of 2020. The allowance for credit losses to total loans was ~~1.59% up from 0.96%~~1.35% at ~~year-end 2019.~~June 30, 2021 compared to 1.42% at December 31, 2020. The allowance for credit losses to nonaccrual loans was ~~128.82%~~281.73% at June 30, 2021 compared to ~~301.91%~~243.35% at ~~year-end 2019.~~December 31, 2020.

~~The~~See Note (2) of the Notes to Consolidated Financial Statements for disclosure regarding the Company’s ~~principal subsidiary bank, BancFirst, has entered into an agreement to sell approximately $21.5 million in loans~~recent developments, including mergers and $38.0 million in deposits from its Hugo, Oklahoma branch to AmeriState Bank in Atoka, Oklahoma. The transaction is scheduled to be completed during the first quarter of 2021 and is subject to regulatory approval.acquisitions.

On ~~March 5, 2020,~~June 17, 2021, the Company ~~purchased approximately $47.8~~completed a private placement, under Regulation D of the Securities Act of 1933, of $60 million ~~in total assets, which included $22.9 million in loans and assumed approximately $45.0 million in deposits and certain other obligations~~aggregate principal amount of ~~The Citizens State Bank~~3.50% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “Subordinated Notes”) to various institutional accredited investors. See Note (7) of ~~Okemah, Oklahoma “Citizens”~~the Notes to Consolidated Financial Statements for a ~~purchase price of $2.9 million. As a result~~complete discussion of the purchase, the Company recorded a core deposit intangible of approximately $206,000 and goodwill of approximately $1.3 million. The effect of this purchase was included in the consolidated financial statements of the Company from the date of purchase forward. The purchase did not have a material effect on the Company’s ~~consolidated financial statements. Citizens was an Oklahoma state-chartered bank with banking locations in Okemah and Paden, Oklahoma. These banking locations became branches of BancFirst.~~subordinated notes.

~~In the first quarter of 2020, the Company repurchased 59,284 shares of its common stock for $3.1 million at an average price of $52.26 per shares under the Company’s stock repurchase program.~~

~~On August 15, 2019 the Company acquired Pegasus Bank as described in the Company’s form 10-K for the year ended December 31, 2019.~~

~~See Note (1) of~~There have been no changes in the ~~Notes to Consolidated Financial Statements for a discussion of~~Company’s disclosures regarding recently issued accounting ~~pronouncements.~~pronouncements since December 31, 2020, the date of its most recent annual report to stockholders.

See Note ~~(11)~~(12) of the Notes to Consolidated Financial Statements for disclosures regarding business segments.

The following table presents, for the periods indicated, certain information related to our average balance sheet and our 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. Average balances are derived from daily averages.

BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)
Taxable Equivalent Basis
(Dollars in thousands)
	Three Months Ended June 30,
	2021								2020
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans (1)	$	6,300,418		$	82,598		5.26	%	$	6,683,576		$	78,978		4.74	%
Debt securities – taxable		534,774			1,602		1.20			570,456			2,047		1.44
Debt securities – tax exempt		15,058			88		2.35			34,421			196		2.28
Federal funds sold and interest-bearing deposits with banks		3,111,009			825		0.11			1,466,634			395		0.11
Total earning assets		9,961,259			85,113		3.43			8,755,087			81,616		3.74
Nonearning assets:
Cash and due from banks		274,168								198,495
Interest receivable and other assets		684,089								607,549
Allowance for credit losses		(92,899	)							(68,259	)
Total nonearning assets		865,358								737,785
Total assets	$	10,826,617							$	9,492,872
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	856,800		$	156		0.07	%	$	774,083		$	169		0.09	%
Savings deposits		3,692,119			939		0.10			3,275,394			1,343		0.16
Time deposits		657,473			908		0.55			700,740			2,238		1.28
Short-term borrowings		2,145			—		0.06			4,354			1		0.05
Long-term borrowings		—			—		—			2,308			—		—
Subordinated debt		27,454			578		8.44			26,804			492		7.37
Total interest-bearing liabilities		5,235,991			2,581		0.20			4,783,683			4,243		0.36
Interest-free funds:
Noninterest-bearing deposits		4,432,892								3,627,609
Interest payable and other liabilities		47,868								40,911
Stockholders’ equity		1,109,866								1,040,669
Total interest free funds		5,590,626								4,709,189
Total liabilities and stockholders’ equity	$	10,826,617							$	9,492,872
Net interest income				$	82,532							$	77,373
Net interest spread							3.23	%							3.38	%
Effect of interest free funds							0.09	%							0.16	%
Net interest margin							3.32	%							3.54	%

For these computations, information is shown on a taxable-equivalent basis assuming a 21% tax rate.
(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

BANCFIRST CORPORATION
CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS
(Unaudited)
Taxable Equivalent Basis
(Dollars in thousands)
	Six Months Ended June 30,
	2021								2020
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans (1)	$	6,350,354		$	160,363		5.09	%	$	6,227,038		$	155,636		5.01	%
Debt securities – taxable		528,272			3,295		1.26			538,674			4,633		1.72
Debt securities – tax exempt		17,187			177		2.08			25,947			319		2.47
Federal funds sold and interest-bearing deposits with banks		2,751,005			1,420		0.10			1,480,203			5,164		0.70
Total earning assets		9,646,818			165,255		3.45			8,271,862			165,752		4.02
Nonearning assets:
Cash and due from banks		271,523								195,088
Interest receivable and other assets		683,978								594,876
Allowance for credit losses		(91,731	)							(59,887	)
Total nonearning assets		863,770								730,077
Total assets	$	10,510,588							$	9,001,939
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	812,145		$	304		0.08	%	$	794,955		$	684		0.17	%
Savings deposits		3,598,589			2,045		0.11			3,147,744			7,592		0.48
Time deposits		657,704			1,976		0.61			699,280			4,874		1.40
Short-term borrowings		2,534			1		0.05			3,401			8		0.46
Long-term borrowings		—			—		—			1,154			—		—
Subordinated debt		27,131			1,069		7.94			26,804			983		7.35
Total interest-bearing liabilities		5,098,103			5,395		0.21			4,673,338			14,141		0.61
Interest-free funds:
Noninterest-bearing deposits		4,270,391								3,257,976
Interest payable and other liabilities		44,713								38,894
Stockholders’ equity		1,097,381								1,031,731
Total interest free funds		5,412,485								4,328,601
Total liabilities and stockholders’ equity	$	10,510,588							$	9,001,939
Net interest income				$	159,860							$	151,611
Net interest spread							3.24	%							3.41	%
Effect of interest free funds							0.10	%							0.27	%
Net interest margin							3.34	%							3.68	%

For these computations, information is shown on a taxable-equivalent basis assuming a 21% tax rate.
(1) Nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis.

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Income Statement Data
Net interest income	$	75,852		$	72,287		$	227,133		$	207,982		$	82,363		$	77,208		$	159,569		$	151,281
Provision for credit losses		18,740			2,758			57,656			6,875
(Benefit from)/provision for credit losses														(9,949	)		19,333			(9,949	)		38,916
Securities transactions		—			—			(545	)		821			172			(595	)		267			(545	)
Total noninterest income		34,575			35,627			101,802			101,705			44,618			32,082			84,553			67,227
Salaries and employee benefits		41,995			40,354			123,977			112,649			41,992			42,226			81,569			81,982
Total noninterest expense		66,083			62,191			192,119			175,005			74,023			64,651			138,986			126,036
Net income		20,890			33,368			64,228			99,372			48,192			20,730			90,712			43,338
Per Common Share Data
Net income – basic	$	0.64		$	1.02		$	1.97		$	3.04		$	1.47		$	0.64		$	2.77		$	1.33
Net income – diluted		0.63			1.00			1.94			2.98			1.45			0.63			2.72			1.31
Cash dividends		0.34			0.32			0.98			0.92			0.34			0.32			0.68			0.64
Performance Data
Return on average assets		0.86	%		1.65	%		0.93	%		1.71	%		1.79	%		0.88	%		1.74	%		0.97	%
Return on average stockholders’ equity		7.89			13.80			8.24			14.14			17.42			7.99			16.67			8.42
Cash dividend payout ratio		53.13			31.37			49.75			30.26			23.13			50.00			24.55			48.12
Net interest spread		3.27			3.34			3.36			3.30			3.23			3.38			3.24			3.41
Net interest margin		3.40			3.89			3.58			3.88			3.32			3.54			3.34			3.68
Efficiency ratio		59.84			57.63			58.41			56.51			58.29			59.16			56.93			57.68
Net charge-offs to average loans		0.03			0.04			0.05			0.05			0.06			0.00			0.07			0.02

For the three months ended ~~September~~June 30, ~~2020,~~2021, net interest income, which is the Company’s principal source of operating revenue, increased ~~$3.6~~$5.2 million or ~~4.9%~~6.7% compared to the three months ended ~~September~~June 30, ~~2019.~~2020. Net interest income increased for the second quarter of 2021, due primarily to ~~loan growth,~~ ~~PPP~~$12.0 million in fee income ~~and the drop in interest rates on deposits.~~from PPP loan forgiveness. 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 ~~third~~second quarter of ~~2020~~2021 decreased compared to the ~~third~~second quarter of ~~2019,~~2020, primarily due to the lower average rates on ~~federal funds~~loans, securities and ~~securities~~interest-bearing deposits with banks during the quarter.

Net interest income for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 increased ~~$19.2~~$8.3 million or ~~9.2%~~5.5% compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. Net interest income increased for the six months ended June 30, 2021, due primarily to ~~loan growth,~~$21.7 million in fee income from PPP ~~fee income~~loan forgiveness and the drop in interest rates on deposits. As shown in the preceding table, the Company’s net interest margin for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 decreased compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, primarily due to the lower average rates on ~~federal funds~~loans, securities and ~~securities~~interest-bearing deposits with banks during the ~~quarter.~~period.

The Company’s net interest income and net interest margin have been, and the Company currently expects them to continue to be, impacted by the decreases in market interest ~~rates and the~~rates. The expectation is that interest rates will remain at these low levels for some period of time in light of the ~~on-going~~ongoing response in Federal Reserve policy driven by the economic disruption arising from the COVID-19 pandemic.

~~The Company’s~~For the second quarter of 2021, the Company recorded a net benefit from reversal of provisions for credit losses of $9.9 million, compared to a provision for credit losses of $19.3 million for the ~~third~~second quarter of 2020. The Company’s reversal of provision for the second quarter of 2021 was based on improvements in economic conditions and the Company’s outlook for certain economic indicators. The elevated provision during the second quarter of 2020 was $18.7 million compared to $2.8 million a year ago. The increase in the provision was related to reserve build up for expected credit losses stemming from the COVID-19 pandemic and low energy prices. The Company’s provision this quarter is based on the Company’s ~~quarterly~~ evaluation of the ~~continued~~level of uncertainty and lack of clarity of the timing of an end to the COVID-19 pandemic, as well as the magnitude of the government’s stimulus response to it. To the extent the amount of time the economy remains adversely affected is more extended than the Company’s current projection, the Company expects to see a continuation of higher than normal provision in future periods. The Company establishes an allowance as an estimate of the expected credit losses in the loan portfolio at the

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 ~~$2.1~~$4.2 million for the ~~third~~second quarter of ~~2020,~~2021, compared to net loan ~~charge-offs~~recoveries of ~~$1.9 million~~$87,000 for the ~~third~~second quarter of ~~2019.~~2020. 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 ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the ~~Company’s~~Company recorded a net benefit from reversal of provisions for credit losses of $9.9 million compared to a provision for credit losses ~~was $57.7 million compared to $6.9~~of $38.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. Net loan charge-offs were ~~$3.1 million,~~$4.7, compared to ~~$2.3 million~~$961,000 for the same period of the prior year.

Noninterest income, as presented in the preceding table, ~~decreased~~increased by ~~$1.1~~$12.5 million for ~~third~~second quarter of ~~2020~~2021 compared to the ~~third~~second quarter of 2019. The decrease in noninterest income is primarily due to a decrease in deposit service charges resulting from lower economic activity and government stimulus. Noninterest income included non-sufficient funds fees totaling $6.4 million and $8.8 million for the three month periods ended September 30, 2020 and 2019, respectively. This represents 18.6% and 24.6% of the Company’s noninterest income for the three month periods ended September 30, 2020 and 2019, respectively. In addition, the Company had fees from debit card usage totaling $9.7 million and $8.7 million during the three month periods ended September 30, 2020 and 2019, respectively. This represents 27.9% and 24.3% of the Company’s noninterest income for the three month periods ended September 30, 2020 and 2019, respectively.

~~Noninterest income for the nine months ended September 30, 2020 totaled $101.8 million compared to $101.7 million for the nine months ended September 30, 2019.~~2020. The increase in noninterest income was primarily due to ~~growth~~a purchase gain of $6.0 million associated with The First National Bank and Trust Company of Vinita, Oklahoma, $2.2 million in rental income from other real estate property, and a $2.7 million increase in income from debit card ~~usage~~interchange fees, which were partially offset by ~~decreased service charges~~a $1.5 million decrease in income from sweep fees. In addition, the Company earned $2.1 million on ~~deposits and equity security losses.~~ the sale of loans for second quarter of 2021 compared to $1.6 million for second quarter of 2020. The income from sales of loans increased due to the increase in volume of mortgage loans originated because of record low mortgage rates.

Noninterest income included non-sufficient funds fees ~~from debit card usage~~ totaling ~~$27.0~~$5.6 million and ~~$25.1~~$5.0 million ~~during~~for the ~~nine months~~three month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. This represents ~~26.5%~~12.6% and ~~24.6%~~15.6% of the Company’s noninterest income for the ~~nine month periods ended September 30, 2020 and 2019, respectively.~~respective periods. In addition, the Company had ~~non-sufficient fund~~debit card interchange fees totaling ~~$19.7~~$11.9 million and ~~$24.5~~$9.1 million during the ~~nine months~~three month periods ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. This represents ~~19.3%~~26.6% and ~~24.1%~~28.5% of the Company’s noninterest income for the ~~nine month periods ended September 30,~~respective periods. For the second quarter of 2021 compared to the second quarter of 2020, government assistance funds that flowed into the market, including PPP loans and ~~2019, respectively.~~

~~The Durbin Amendment is a provision~~stimulus payments to households, increased both customer liquidity and interchange volume resulting in ~~the larger Dodd-Frank Act that gave the Federal Reserve the authority to establish rates on~~higher debit card ~~transactions.~~interchange fees.

Noninterest income increased by $17.3 million for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The ~~Durbin Amendments’ intent is~~increase in noninterest income was primarily due to ~~control~~a purchase gain of $6.0 million associated with The First National Bank and Trust Company of Vinita, Oklahoma, a gain from the sale of the Company’s Hugo, Oklahoma branch of $2.5 million and $4.6 million in rental income from other real estate property, which were partially offset by a $3.6 million decrease in income from sweep fees. In addition, the Company earned $4.1 million on the sale of loans for the six months ended June 30, 2021 compared to $2.3 million for the six months ended June 30, 2020. The income from sales of loans increased due to the increase in volume of mortgage loans originated because of record low mortgage rates.

Noninterest income included non-sufficient fund fees totaling $11.1 million and $13.3 million during the six months ended June 30, 2021 and 2020, respectively. This represents 13.2% and 19.7% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card interchange fees totaling $22.5 million and ~~restrict anti-competitive practices. The law applies~~$17.3 million during the six months ended June 30, 2021 and 2020, respectively. This represents 26.6% and 25.7% 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 ~~banks with over $10 billion~~households, increased both customer liquidity and interchange volume. This activity resulted in ~~assets~~lower non-sufficient funds fees and ~~limits these banks on what they charge for~~higher debit card interchange ~~fees.~~ fees for the six months ending June 30, 2021 compared to June 30, 2020.

Prior to the COVID-19 pandemic, there was little or no likelihood that the Company would surpass $10 billion in

total assets for several years. However, with the CARES Act, including PPP loans, stimulus payments to households, and artificially high household savings rates, our deposits and assets have grown dramatically beyond reasonably foreseeable levels. To the extent the COVID-19 pandemic continues and the government response to it continues on the same or similar basis, it is likely the Company ~~has an increasingly heightened possibility of exceeding~~will exceed $10 billion in total assets at December 31, ~~2020.~~2021. Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this would trigger an approximate ~~loss~~reduction of annual pretax income from debit card interchange fees of between ~~$16 and $18~~$17 to $20 million ~~in subsequent years.~~beginning July 1, 2022. The Company is ~~developing strategies~~undergoing efforts to ~~avoid exceeding~~reduce total assets below $10 billion ~~in assets and the loss of interchange income,~~at December 31, 2021, but the success of these ~~strategies~~efforts is uncertain.

Noninterest expense, as presented in the preceding table, increased by ~~$3.9~~$9.4 million for ~~third~~second quarter of ~~2020~~2021 compared to the ~~third~~second quarter of ~~2019.~~2020. The increase in noninterest expenses was ~~primarily~~ due to ~~salary increases in 2020~~$3.2 million related to ~~annual merit increases~~other real estate property operating costs, $4.0 million in acquisition related expenses, and ~~noninterest expenses of Pegasus Bank.~~approximately $1.3 million in net occupancy and depreciation primarily from the Company’s new corporate headquarters.

For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, noninterest expense increased by ~~$17.1~~$13.0 million compared to the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The increase in noninterest expenses was ~~primarily~~ due to ~~salary increases in 2020~~approximately $4.6 million related to ~~annual merit increases, pandemic~~other real estate property operating costs, $4.0 million in acquisition related ~~salary~~ expenses, ~~noninterest expenses of Pegasus Bank~~ and ~~acquisition expenses related to the purchase of assets from Citizens, which were partially offset by $2.3~~approximately $2.5 million in net ~~gains~~occupancy and depreciation primarily from the Company’s new corporate headquarters. The second quarter of 2020 included a $2.2 million gain on ~~sales~~the sale of ~~property carried in~~ other real estate ~~owned.~~ owned that reduced noninterest expense.

The Company’s effective tax rate ~~on income before taxes~~ was ~~18.4%~~23.4% for the ~~third~~second quarter of ~~2020,~~2021, compared to ~~22.3%~~18.1% for the ~~third~~second quarter of ~~2019.~~2020. The ~~decrease in the~~lower effective tax rate for the ~~third~~second quarter of 2020 was due to a greater effect of tax credits resulting from lower income.

The Company’s effective tax rate on income before taxes was ~~18.9%~~21.2% for the first ~~nine~~six months of ~~2020,~~2021, compared to ~~22.3%~~19.1% for the first ~~nine~~six months of ~~2019.~~2020. The ~~decrease in the~~lower effective tax rate for the first ~~nine~~six months of 2020 was due to a greater effect of tax credits resulting from lower income.

The 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.

		September 30,			December 31,				June 30,			December 31,
		2020			2019				2021			2020
		(unaudited)							(unaudited)
Balance Sheet Data
Total assets		$	9,618,868		$	8,565,758			$	11,015,287		$	9,212,357
Total loans (net of unearned interest)			6,660,694			5,673,144				6,207,262			6,448,225
Allowance for credit losses			106,126			54,238				83,963			91,366
Debt securities			596,941			491,626				563,771			555,196
Deposits			8,495,891			7,483,635				9,728,389			8,064,704
Stockholders' equity			1,043,752			1,004,989				1,131,591			1,067,885
Book value per share			31.94			30.74				34.52			32.64
Tangible book value per share (non-GAAP)(1)			26.74			25.50				29.35			27.47
Balance Sheet Ratios
Average loans to deposits (year-to-date)			78.73	%		76.06	%
Average earning assets to total assets (year-to-date)			91.92			92.13
Average stockholders’ equity to average assets (year-to-date)			11.26			12.06
Asset Quality Data
Loans past due 90 days and still accruing		$	6,412		$	11,834
Nonaccrual loans (5)			82,385			17,965
Restructured loans			2,837			18,010
Total nonperforming and restructured loans			91,634			47,809
Other real estate owned and repossessed assets			4,939			6,073
Total nonperforming and restructured assets			96,573			53,882
Nonaccrual loans to total loans			1.24	%		0.32	%
Nonaccrual loans to total Non-PPP loans (non-GAAP)(3)			1.41			0.32
Nonperforming and restructured loans to total loans			1.38			0.84
Nonperforming and restructured loans to total Non-PPP loans (non-GAAP)(3)			1.57			0.84
Nonperforming and restructured assets to total assets			1.00			0.63
Allowance for credit losses to total loans			1.59			0.96
Allowance for credit losses to total Non-PPP loans (non-GAAP)(3)			1.82			0.96
Allowance for credit losses to nonaccrual loans			128.82			301.91
Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)	Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)							Reconciliation of Tangible Book Value per Common Share (non-GAAP)(2)
Stockholders' equity		$	1,043,752		$	1,004,989			$	1,131,591		$	1,067,885
Less goodwill			149,922			148,604				149,922			149,922
Less intangible assets, net			19,914			22,608				19,283			18,999
Tangible stockholders' equity (non-GAAP)		$	873,916		$	833,777			$	962,386		$	898,964
Common shares outstanding			32,679,191			32,694,268				32,784,513			32,719,852
Tangible book value per share (non-GAAP)		$	26.74		$	25.50			$	29.35		$	27.47
Selected Financial Ratios
Balance Sheet Ratios:
Average loans to deposits (year-to-date)										68.00	%		78.28	%
Average earning assets to total assets (year-to-date)										91.78			91.90
Average stockholders’ equity to average assets (year-to-date)										10.44			11.17
Asset Quality Data
Loans past due 90 days and still accruing									$	4,386		$	4,802
Nonaccrual loans (3)										29,802			37,545
Restructured loans										7,485			7,784
Total nonperforming and restructured loans										41,673			50,131
Other real estate owned and repossessed assets										40,183			32,480
Total nonperforming and restructured assets										81,856			82,611
Asset Quality Ratios:
Nonaccrual loans to total loans										0.48	%		0.58	%
Nonperforming and restructured loans to total loans										0.67			0.78
Nonperforming and restructured assets to total assets										0.74			0.90
Allowance for credit losses to total loans										1.35			1.42
Allowance for credit losses to nonperforming and restructured loans										201.48			182.26
Allowance for credit losses to nonaccrual loans										281.73			243.35
(1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table.	(1) Refer to the “Reconciliation of Tangible Book Value per Common Share (non-GAAP)” Table.							(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.	(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.							(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.
Reconciliation of Non-PPP loan ratios (non-GAAP)(4)
Total Loans (net of unearned interest)		$	6,660,694		$	5,673,144
Less total PPP loans			831,703			—
Total Non-PPP loans (non-GAAP)		$	5,828,991		$	5,673,144
Nonaccrual loans (5)		$	82,385		$	17,965
Nonaccrual loans to total Non-PPP loans (non-GAAP)			1.41	%		0.32	%
Total nonperforming and restructured loans		$	91,634		$	47,809
Nonperforming and restructured loans to total Non-PPP loans (non-GAAP)			1.57	%		0.84	%
Allowance for credit losses		$	106,126		$	54,238
Allowance for credit losses to total Non-PPP loans (non-GAAP)			1.82	%		0.96	%
(3) Refer to the “Reconciliation of Non-PPP loan ratios (non-GAAP)” Table.
(4) Nonaccrual loans to total Non-PPP loans is nonaccrual loans, divided by total loans less Paycheck Protection Program (PPP) loans. Nonperforming and restructured loans to total Non-PPP loans is nonperforming and restructured loans, divided by total loans less PPP loans. Allowance for credit losses to total Non-PPP loans is allowance for credit losses, divided by total loans less PPP loans. These amounts are non-GAAP financial measures but have been included as they are considered critical metrics with which to analyze and evaluate the financial condition and capital strength of the Company. These measures should not be considered substitutes for operating results determined in accordance with GAAP.
(5) Approximately $8.4 million of nonaccrual loans are guaranteed by government agencies.
(3) Government Agencies guarantee approximately $3.5 million of nonaccrual loans at June 30, 2021.								(3) Government Agencies guarantee approximately $3.5 million of nonaccrual loans at June 30, 2021.

The aggregate of cash and due from banks and interest-bearing deposits with banks ~~decreased~~increased by ~~$32.8 million~~$2.0 billion or ~~1.8%~~125.2% to ~~$1.8~~$3.6 billion, from December 31, ~~2019~~2020 to ~~September~~June 30, ~~2020. As shown on the Company’s cash flow statement, the primary use of cash~~2021. The increase was ~~due~~primarily related to the increase in ~~loans.~~deposits from PPP and other government stimulus payments.

At ~~September~~June 30, ~~2020,~~2021, total debt securities increased ~~$105.3~~$8.6 million, or ~~21.4%~~1.5% compared to December 31, ~~2019.~~2020. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized gain on debt securities available for sale, before taxes, was ~~$11.7~~$7.1 million at ~~September~~June 30, ~~2020,~~2021, compared to a net unrealized gain of ~~$4.6~~$9.9 million at

December 31, ~~2019.~~2020. These unrealized gains are included in the Company’s stockholders’ equity as accumulated other comprehensive income, net of income tax, in the amounts of a gain of ~~$8.7~~$5.4 million at ~~September~~June 30, ~~2020~~2021 and a gain of ~~$3.5~~$7.4 million at December 31, ~~2019.~~ 2020.

The ~~net~~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 ~~increased~~and losses are reported as securities transactions in ~~2020 due to~~ the ~~Federal Reserve decreasing interest rates to near zero in March 2020 because~~noninterest income section of the ~~economic effects~~consolidated statements of comprehensive income. Equity securities are reported in other assets on the balance sheet. The balance of equity securities was $10.4 million at June 30, 2021 and $10.1 million at December 31, 2020. The Company reviews its portfolio of equity securities for impairment at least quarterly.

See Note (3) of the ~~COVID-19 pandemic. As~~Notes to Consolidated Financial Statements for disclosures regarding the effects on the economy due to the COVID-19 pandemic became more apparent late in the first quarter, monetary flows were directed to high quality fixed income instruments such as short-term Treasury securities. Over the nine-month period, the yield on the three-year Treasury note decreased 146 basis points with a corresponding increase in valuations.Company’s Securities.

At ~~September~~June 30, ~~2020,~~2021, total loans ~~totaled $6.7 billion, an increase of $987.6~~decreased $241.0 million ~~from~~or 3.7% compared to December 31, ~~2019.~~2020. The ~~increase~~decrease in loans was due primarily ~~related~~ to ~~the~~a net decrease of approximately $284 million in PPP ~~internal growth~~loans and the ~~purchase~~sale of approximately $21 million of loans from ~~Citizens.~~the Company’s Hugo, Oklahoma branch along with pay downs on loans. The decrease in loans were partially offset by the Company’s purchase of approximately $195 million in loans, from The First National Bank and Trust Company of Vinita, Oklahoma. At ~~September~~June 30, ~~2020,~~2021, the balance of total PPP loans was ~~$831.7~~$368.6 million, net of unamortized processing fees of ~~$22.5~~$16.6 million. 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. At September 30, 2020, the Company had the following exposures to industries adversely impacted by the COVID-19 pandemic: energy $456.9 million, medical $154.7 million, hotels/motels $128.4 million and restaurants $83.8 million. In total, these industries represented approximately 13%

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

In addition, due to the impacts of the COVID-19 pandemic, the Company has approximately $104.5 million in modified loans, most of which are secured by commercial real estate, as of September 30, 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. Consequently, it is reasonable to expect that when temporary regulatory accounting relief and payment modifications cease, there could be a marked increase in credit deteriorated and restructured loans. The timing and extent of such consequences are impossible to ascertain at this time and are dependent on the duration of the COVID-19 pandemic, the level and success of the government’s economic stimulus, and further regulatory guidance.portfolio segments.

On January 1, 2020, the Company adopted ASC 326, which replaces the incurred loss methodology with an expected loss methodology that is referred to as CECL. ~~As a result, the Company recorded a decrease to the allowance for credit losses of $3.2 million at January 1, 2020. At September 30, 2020, the~~The allowance for credit losses to total loans represented ~~1.59% of total loans, compared to 0.96%~~1.35% and 1.42% at June 30, 2021 and December 31, ~~2019.~~2020, respectively. The ~~increase~~decrease in the allowance for credit ~~losses related to reserve build up for~~loss during the second quarter of 2021 was primarily driven by a reversal of provision during the quarter based on sustained improvements in the economy, both nationally and in Oklahoma, which reduced the amount of expected credit ~~losses stemming from~~loss within the ~~COVID-19 pandemic and low energy prices.~~

~~The fair value adjustment on~~loan portfolio. This reduction was partially offset by additional allowance for credit loss required by newly acquired loans ~~consists~~purchased with credit deterioration.

At June 30, 2021, nonperforming and restructured assets decreased $754,000 to $81.9 million compared to December 31, 2020. The Company’s level of ~~an interest rate component~~nonperforming and restructured assets has continued to ~~adjust the effective rates on the~~be relatively low, equating to 0.74% of total assets at June 30, 2021 and 0.90% of total assets at December 31, 2020.

Nonaccrual loans totaled $29.8 million at June 30, 2021, compared to ~~market rates and a credit component to adjust for estimated credit exposures in the acquired loans. The interest rate component was $846,000 at September 30, 2020 and $1.7~~$37.5 million at December 31, ~~2019. The credit component of~~2020. At June 30, 2021, the ~~adjustment was $2.8 million at September 30, 2020 and $6.8 million at December 31, 2019. These fair value adjustments will be accreted to income over the remaining life of the loans.~~

~~Nonaccrual loans totaled $82.4 million at September 30, 2020, compared to $18.0 million at the end of 2019. The increase in~~Company’s nonaccrual loans ~~was~~decreased $7.7 million from year-end 2020, due to ~~further deterioration~~resolutions of ~~the financial condition~~several loans, which was slightly offset by $7.3 million of ~~commercial loans.~~nonaccrual loans acquired from The First National Bank and Trust Company of Vinita, Oklahoma. The Company’s nonaccrual loans are primarily commercial and ~~real~~agricultural non-real estate ~~loans.~~and farmland. 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 orand principal ~~or both~~ is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, interest income is recognized on certain of these loans on a cash basis if the full collection of the remaining principal balance is

~~reasonably expected. Otherwise, interest income is~~ not ~~recognized until the principal balance is fully collected.~~in doubt. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately ~~$2.1~~$1.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 and ~~$1.4 million~~$983,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. Only a small amount of this interest is expected to be ultimately collected. Approximately $3.5 million of nonaccrual loans were guaranteed by government agencies at June 30, 2021.

~~Troubled debt restructured~~Restructured loans totaled ~~$2.8~~$7.5 million at ~~September~~June 30, ~~2020,~~2021 compared to ~~$18.0~~$7.8 million at ~~the end of 2019. The decrease in troubled debt restructurings was due primarily to a review of troubled debt restructurings during the period and the related performance of the borrowers.~~December 31, 2020. 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.

The classification of a loan as nonperforming 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 decline. The above normal risk associated with nonperforming loans has been considered in the determination of the allowance for credit losses. At June 30, 2021, the allowance for credit losses as a percentage of nonperforming and restructured loans was 201.48%, compared to 182.26%, at December 31, 2020. The level of nonperforming loans and credit losses could rise over time as a result of adverse economic conditions.

Other real estate owned (OREO) and repossessed assets totaled $40.2 million at June 30, 2021, compared to $32.5 million at December 31, 2020. Other real estate owned consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. At June 30, 2021, the Company’s OREO increased $8.0 million from December 31, 2020, and included approximately $4.0 million due to the repossession of one commercial real estate property, $2.4 million from the decommissioning of the Company’s previous headquarters, and $2.5 million for other real estate acquired from The First National Bank and Trust Company of Vinita, Oklahoma. As of both June 30, 2021 and December 31, 2020, other real estate owned included a commercial real estate property recorded at approximately $28 million. Other real estate owned and repossessed assets 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 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. Decreases in values of properties subsequent to their classification as other real estate owned are charged to operating expense.

Identifiable intangible assets and goodwill totaled ~~$4.9~~$169.2 million and $168.9 million at ~~September~~June 30, 2021 and December 31, 2020, ~~compared~~respectively.

On May 20, 2021, the Company recorded a core deposit intangible of approximately $1.9 million because of the purchase of assets and assumption of liabilities from The First National Bank and Trust Company of Vinita, Oklahoma. See Note (2) of the Notes to ~~$6.1~~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 $81.9 million at June 30, 2021 and $80.7 million at December 31, ~~2019. Other real estate owned~~2020. In addition, other assets includes approximately $11.1 million in equity interest of a previous borrower in the oil and ~~repossessed assets decreased during 2020 primarily due to~~gas industry, which was received through bankruptcy proceedings in the ~~sale~~fourth quarter of ~~one property.~~2020. This asset is carried at cost less 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.

~~Potential problem loans are performing loans to borrowers with a weakened financial condition, or~~Low Income Housing and New Market Tax Credit Investments

During 2021, there have not been any material changes in the Company’s low income housing tax credit investments and new market tax credit investments, which are ~~experiencing unfavorable trends~~included in ~~their financial condition, which causes management~~other assets on the Company’s balance sheet. See Note (6) of the Notes to ~~have concerns as to~~Consolidated Financial Statements in the ~~ability of such borrowers to comply with~~Company’s Annual Report on Form 10-K for the ~~existing repayment terms. The Company had approximately $9.6 million of these loans at September 30, 2020, compared to $13.7 million at~~year ended December 31, ~~2019. Potential problem loans are not included in nonperforming and restructured loans. In general,~~2020, for disclosures regarding these loans are adequately collateralized and have no specific identifiable loss. Loans which are considered to have identifiable loss potential are placed on nonaccrual status, are allocated a specific allowance for loss or are directly charged-down, and are reported as nonperforming.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 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.

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, 2020.

At ~~September~~June 30, ~~2020,~~2021, deposits totaled ~~$8.5~~$9.7 billion, an increase of ~~$1.0~~$1.7 billion or ~~13.5%~~20.6% from the December 31, ~~2019~~2020 total. The increase in deposits was primarily related to deposits of proceeds from the PPP and ~~inflow of existing customer deposits.~~other government stimulus payments. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits were ~~98.2%~~98.5% at ~~September~~June 30, ~~2020~~2021 and ~~98.4%~~98.2% at December 31, ~~2019.~~2020. Noninterest-bearing deposits to total deposits were ~~44.3%~~46.0% at ~~September~~June 30, ~~2020,~~2021, compared to ~~39.5%~~47.0% at December 31, ~~2019.~~2020.

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) 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 ~~$300,000~~$3.1 million at ~~September~~June 30, ~~2020,~~2021, compared to $1.1 million at December 31, ~~2019.~~2020.

The Company has a line of credit from the Federal Home Loan Bank (“FHLB”) of Topeka, Kansas to use for liquidity or to match-fund certain long-term fixed-rate loans. The Company’s assets, including residential first mortgages of ~~$836.6~~$849.8 million, are pledged as collateral for the borrowings under the line of credit. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had no advances outstanding under the line of credit from FHLB. In addition, the Company had a revolving line of credit with another financial institution with the ability to draw up to $10.0 million with no advances outstanding. This line of credit had a variable rate based on prime rate minus 25 basis points and matured in the third quarter of 2020.

Stockholders’ equity totaled ~~$1.0~~$1.1 billion at both ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. In addition to net income of ~~$64.2~~$90.7 million, other changes in stockholders’ equity during the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 included ~~$858,000~~$1.7 million related to common stock issuances ~~$1.3~~and $1.0 million related to stock-based compensation, ~~$2.3 million change in accounting principle related to CECL and a $5.3 million increase in other comprehensive income,~~ that were partially offset by ~~$32.0~~$22.3 million in dividends, $5.5 million from settlement of options in cash, and ~~$3.1~~a $2.0 million decrease in ~~common stock repurchases.~~other comprehensive income. The Company’s leverage ratio and total risk-based capital ratios at ~~September~~June 30, ~~2020,~~2021, were well in excess of the regulatory requirements.

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

There have not been any material changes in the ~~resources required for scheduled repayments of contractual obligations from the table of Contractual Cash Obligations~~Company’s liquidity 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, ~~2019.~~

Three Months Ended September 30,

2020

2019

Interest

Average

Interest

Average

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

ASSETS

Earning assets:

Loans (1)

$
6,671,344

$
76,744

4.56
%

$
5,376,278

$
75,446

5.57
%
Securities – taxable

591,933

2,032

1.36

427,152

2,361

2.19

Securities – tax exempt

33,785

166

1.95

17,399

130

2.96

Federal funds sold and interest-bearing deposits with banks

1,567,437

422

0.11

1,577,446

8,705

2.19

Total earning assets

8,864,499

79,364

3.55

7,398,275

86,642

4.65

Nonearning assets:

Cash and due from banks

241,160

178,862

Interest receivable and other assets

619,570

500,067

Allowance for credit losses

(88,823
)

(56,056
)

Total nonearning assets

771,907

622,873

Total assets

$
9,636,406

$
8,021,148

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing liabilities:

Transaction deposits

$
678,447

$
125

0.07
%

$
737,162

$
646

0.35
%
Savings deposits

3,393,158

890

0.10

2,835,855

10,127

1.42

Time deposits

699,074

1,839

1.04

690,867

2,871

1.65

Short-term borrowings

3,117

—

0.05

1,063

7

2.72

Long-term borrowings

2,119

—

—

—

—

—

Junior subordinated debentures

26,804

491

7.27

26,804

491

7.27

Total interest-bearing liabilities

4,802,719

3,345

0.28

4,291,751

14,142

1.31

Interest-free funds:

Noninterest-bearing deposits

3,722,973

2,720,830

Interest payable and other liabilities

60,574

49,262

Stockholders’ equity

1,050,140

959,305

Total interest free funds

4,833,687

3,729,397

Total liabilities and stockholders’ equity

$
9,636,406

$
8,021,148

Net interest income

$
76,019

$
72,500

Net interest spread

3.27
%

3.34
%
Effect of interest free funds

0.13
%

0.55
%
Net interest margin

3.40
%

3.89
%

BANCFIRST CORPORATION

CONSOLIDATED AVERAGE BALANCE SHEETS AND INTEREST MARGIN ANALYSIS

(Unaudited)

Taxable Equivalent Basis

(Dollars in thousands)

Nine Months Ended September 30,

2020

2019

Interest

Average

Interest

Average

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

ASSETS

Earning assets:

Loans (1)

$
6,376,221

$
232,380

4.85
%

$
5,158,737

$
215,462

5.58
%
Securities – taxable

556,557

6,665

1.60

613,365

10,551

2.30

Securities – tax exempt

28,579

485

2.26

19,687

439

2.98

Federal funds sold and interest-bearing deposits with banks

1,509,493

5,586

0.49

1,397,739

24,590

2.35

Total earning assets

8,470,850

245,116

3.85

7,189,528

251,042

4.67

Nonearning assets:

Cash and due from banks

210,558

178,826

Interest receivable and other assets

603,167

469,615

Allowance for credit losses

(69,603
)

(53,814
)

Total nonearning assets

744,122

594,627

Total assets

$
9,214,972

$
7,784,155

LIABILITIES AND STOCKHOLDERS’ EQUITY

Interest-bearing liabilities:

Transaction deposits

$
755,835

$
809

0.14
%

$
743,158

$
1,967

0.35
%
Savings deposits

3,230,145

8,482

0.35

2,700,393

30,852

1.53

Time deposits

699,211

6,713

1.28

688,056

8,164

1.59

Short-term borrowings

3,306

8

0.33

1,650

29

2.31

Long-term borrowings

1,478

—

—

—

—

—

Junior subordinated debentures

26,804

1,474

7.33

26,804

1,474

7.35

Total interest-bearing liabilities

4,716,779

17,486

0.49

4,160,061

42,486

1.37

Interest-free funds:

Noninterest-bearing deposits

3,414,106

2,643,189

Interest payable and other liabilities

46,175

41,138

Stockholders’ equity

1,037,912

939,767

Total interest free funds

4,498,193

3,624,094

Total liabilities and stockholders’ equity

$
9,214,972

$
7,784,155

Net interest income

$
227,630

$
208,556

Net interest spread

3.36
%

3.30
%
Effect of interest free funds

0.22
%

0.58
%
Net interest margin

3.58
%

3.88
%

~~Except as set forth below, there~~There have been no significant changes in the ~~Registrant’s~~Company’s disclosures regarding market risk since December 31, ~~2019,~~2020, the date of its most recent annual report to stockholders.

The Company seeks to reduce volatility in its net interest margin and net interest income through periods of changing interest rates. Accordingly, the Company’s interest rate sensitivity and liquidity are monitored on an ongoing basis by its Asset and Liability Committee (“ALCO”). The ALCO establishes risk measures, limits and policy guidelines for managing the amount of interest rate risk and its effect on net interest income and capital. A variety of tools are used to evaluate the magnitude of interest rate risk, the distribution of risk, the level of risk over time and the exposure to changes in certain interest rate relationships.

The ALCO also utilizes an earnings simulation model as a quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income over the next 12 months. These simulations incorporate assumptions regarding changes in interest rates and the maturity and repricing of earning assets and interest-bearing liabilities.

The ALCO uses gap analysis to monitor interest rate sensitivity based on the maturity and repricing frequencies of its earning assets and interest-bearing liabilities. This analysis indicates that the Company’s position is asset-sensitive, with a positive gap of $356 million for the zero to 12-month interval at September 30, 2020, which was 4.19% of total assets, compared to a positive gap of $172 million for the zero to 12-month interval at December 31, 2019, which was 2.30% of total assets.

The ALCO continuously monitors and manages the balance between interest rate-sensitive assets and liabilities. The objective is to manage the impact of fluctuating market rates on net interest income within acceptable levels. In order to meet this objective, management may lengthen or shorten the duration of assets or liabilities.

As of September 30, 2020, the model simulations projected that a 100 and 200 basis point increase would result in positive variance in net interest income of 1.05% and 2.94%, respectively, relative to the base case over the next 12 months.

As of December 31, 2019, the model simulations projected that a 100 and 200 basis point increase would result in positive variance in net interest income of 1.97% and 4.08%, respectively, relative to the base case over the next 12 months. Conversely, the model simulation projected that a decrease in interest rates of 100 basis points would result in a negative variance in net interest income of 2.84% relative to the base case over the next 12 months.

~~The~~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 Vice President of Corporate Finance, have evaluated, as of the last day of the period covered by this report, the Company’s disclosure controls and ~~procedures.~~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.

~~The adoption of ASC 326 required~~Changes in Internal Control Over Financial Reporting. During the ~~implementation of new accounting policies and procedures, including enhancements~~period to ~~our information systems,~~ which ~~changed~~ this report relates, there have not been any changes in the Company’s internal controls over financial reporting ~~for~~(as defined in Rule 13a-15(f) and 15d-15(f) under the analysis of the allowance for credit losses and related disclosures. Other than the change related to the adoption of ASC 326, there were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal controls over financial reportingExchange Act) that have materially affected, or are reasonably likely to materially affect, ~~those~~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.

Except as set forth below, as of ~~September~~June 30, ~~2020,~~2021, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019:~~2020:

The ~~COVID-19 pandemic has impacted our business, and~~Durbin Amendment is a provision in the ~~ultimate impact on our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted, including~~larger Dodd-Frank Act that gave the ~~scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.~~

~~With the lack of precedent, we are unable to predict with a high level of confidence how the COVID-19 pandemic will affect our business.~~ The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in closures of many businesses. As a result, the demand for our products and services may be significantly impacted. Furthermore, the pandemic has influenced and could further influence the recognition of credit losses in our loan portfolios and has increased and could further increase our allowance for credit losses, particularly if businesses remain closed or otherwise adversely affected for an extended period of time, or even permanently. In addition, we are a lender for the Paycheck Protection Program ("PPP") of the Small Business Administration (SBA) and other SBA, Federal Reserve ~~or United States Treasury programs that have been or~~the authority to establish rates on debit card transactions. The Durbin Amendment aims to control debit card interchange fees and restrict anti-competitive practices. The law applies to banks with over $10 billion in assets and limits what these banks may ~~be created in~~charge for debit card interchange fees. At December 31, 2020, the ~~future in response to~~Company’s assets did not exceed $10 billion, but at June 30, 2021 the ~~pandemic. These programs are new, the terms are subject to political influence and their effects on our business are uncertain.~~ ~~Through September 30, 2020, we approved 8,476 loans totaling approximately $831.7 million, net of unamortized processing fees of $22.5 million.~~ The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted.

In addition, due to the impacts of the COVID-19 pandemic, the Company has approximately $104.5 million in modified loans, most of which are secured by commercial real estate, as of September 30, 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. Consequently, it is reasonable to expect that when temporary regulatory accounting relief and payment modifications cease, there could be a marked increase in credit impairment and restructured loans. The timing and extent of such consequences are impossible to ascertain at this time and are dependent on the duration of the COVID-19 pandemic, the level and success of the government’s economic stimulus, and further regulatory guidance.

Company’s assets did exceed $10 billion. Prior to the COVID-19 pandemic, there was little or no likelihood that the Company would surpass $10 billion in total assets for several years. However, with the CARES Act, including PPP loans, stimulus payments to households, and artificially high household savings rates, our deposits and assets have grown dramatically beyond ~~any~~ reasonably foreseeable levels. To the extent the COVID-19 pandemic continues and the government response to it ~~continue in~~continues on the same or similar ~~manner,~~basis, it is likely the Company ~~has an increasingly heightened possibility of exceeding~~will exceed $10 billion in total assets at December 31, ~~2020.~~2021. Pursuant to the Durbin Amendment of the Dodd-Frank Act, based on current run rates, this would trigger an approximate ~~loss~~reduction of annual pretax income from debit card interchange fees of between ~~$16 and $18~~$17 to $20 million ~~in subsequent years.~~beginning July 1, 2022. The Company is ~~developing strategies~~undergoing efforts to ~~avoid exceeding~~reduce total assets below $10 billion ~~in assets and the loss of interchange income,~~at December 31, 2021, but the success of these ~~strategies~~efforts is ~~uncertain.~~

Significant uncertainties as to future economic conditions exist, and we have taken deliberate actions in response. Additionally, the economic pressures have contributed to an increased provision for credit losses for 2020. We continue to monitor the impact of the COVID-19 pandemic closely, as well as any effects that may result from the CARES Act; however, the extent to which the COVID-19 pandemic will impact our operations and financial results during the remainder of 2020 is highly uncertain.

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.)

~~101~~100 N. Broadway Ave., Oklahoma City, Oklahoma		73102-8405
(Address of principal executive offices)		(Zip Code)

~~Loan Segment~~	~~Life (in years)~~
~~BancFirst~~
~~Real estate:~~
~~Commercial real estate owner occupied~~		8
~~Commercial real estate non-owner occupied~~		6
~~Construction and development < 60 months~~		3
~~Construction residential real estate < 60 months~~		1
~~Residential real estate first lien~~		13
~~Residential real estate all other~~		6
~~Farmland~~		12
~~Commercial and agricultural non-real estate~~		3
~~Consumer non-real estate~~		4
~~Other loans~~		9
~~Pegasus Bank~~		4

	June 30, 2021		December 31, 2020
	Amount		Amount
	(Dollars in thousands)
BancFirst energy loans
Upstream	$	141,651	$	190,788
Midstream		37,134		49,734
Ancillary services		74,919		59,410
Pegasus Bank energy loans
Upstream		127,736		107,103
Midstream		8,797		11,047
Ancillary services		14,049		12,503
Total	$	404,286	$	430,585

Other loans
Grade 1	379,715	34,608	29,464	24,034	18,060	25,568	23,298	534,747
Grade 2	—	—	250	17	2,638	2,434	820	6,159
Grade 3	—	11	225	10	1	99	199	545
Grade 4	—	137	—	—	294	140	1,012	1,583
Total other loans	379,715	34,756	29,939	24,061	20,993	28,241	25,329	543,034
Pegasus Bank
Grade 1	64,138	87,556	58,223	7,261	16,202	52,432	153,260	439,072
Grade 2	27,016	14,313	18,116	10,578	21,378	6,717	48,741	146,859
Grade 3	—	112	—	—	—	—	—	112
Total Pegasus Bank	91,154	101,981	76,339	17,839	37,580	59,149	202,001	586,043
Total loans held for investment	$1,538,093	$1,378,175	$900,281	$469,620	$358,467	$789,747	$756,847	$6,191,230

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

	January 1, 2020
	As Reported Under ASC 326		Pre ASC 326 Adoption		Impact of ASC 326 Adoption
	(Dollars in thousands)
BancFirst
Real estate:
Commercial real estate owner occupied	$	2,819	$	5,625	$	(2,806	)
Commercial real estate non-owner occupied		2,851		8,358		(5,507	)
Construction and development < 60 months		1,158		2,214		(1,056	)
Construction residential real estate < 60 months		1,155		1,933		(778	)
Residential real estate first lien		4,861		8,692		(3,831	)
Residential real estate all other		1,359		2,767		(1,408	)
Farmland		1,413		2,821		(1,408	)
Commercial and agricultural non-real estate		27,194		15,345		11,849
Consumer non-real estate		2,630		3,252		(622	)
Other loans		2,516		2,632		(116	)
Pegasus Bank		3,087		599		2,488
Allowance for credit losses on loans	$	51,043	$	54,238	$	(3,195	)

	Loans acquired with deteriorated credit quality
	(Dollars in thousands)
For the period ended September 30, 2020
Purchase price of acquired loans	$	860
Allowance for credit losses of acquired loans		460
Par value of acquired loans	$	1,320

	Loans acquired with deteriorated credit quality
	(Dollars in thousands)
For the period ended June 30, 2021
Purchase price of loans at acquisition	$	26,779
Allowance for credit losses at acquisition		7,272
Par value of acquired loans at acquisition	$	34,051

For the period ended June 30, 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

							Other		Executive,
	Metropolitan		Community		Pegasus		Financial		Operations
	Banks		Banks		Bank		Services		& Support		Consolidated
	(Dollars in thousands)
Nine months ended September 30, 2020
Balance at beginning of period	$	13,767	$	59,894	$	68,855	$	5,464	$	624	$	148,604
Acquisitions		—		1,318		—		—		—		1,318
Balance at beginning and end of period	$	13,767	$	61,212	$	68,855	$	5,464	$	624	$	149,922

						Wgtd. Avg.
				Wgtd. Avg.		Remaining	Aggregate
				Exercise		Contractual	Intrinsic
	Options			Price		Term	Value
	(Dollars in thousands, except option data)
Nine Months Ended September 30, 2020
Outstanding at December 31, 2019		1,257,730		$	32.70
Options granted		170,000			48.92
Options exercised		(42,900	)		19.27
Options canceled, forfeited, or expired		(139,000	)		51.75
Outstanding at September 30, 2020		1,245,830			33.25	8.74 Yrs	$	9,459
Exercisable at September 30, 2020		699,080			24.72	7.05 Yrs	$	11,267

	September 30, 2020
	(Dollars in thousands)
Unearned stock-based compensation expense	$	3,961

	Shares
Three Months Ended ~~September~~June 30, 2021		43,093
Three Months Ended June 30, 2020		~~377,071~~448,016
~~Three~~Six Months Ended ~~September~~June 30, ~~2019~~2021		~~164,696~~108,055
~~Nine~~Six Months Ended ~~September~~June 30, 2020		~~408,867~~
~~Nine Months Ended September 30, 2019~~		~~174,489~~424,939

	Three Months Ended September 30,
	2020								2019
				Interest		Average						Interest		Average
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate			Balance			Expense		Rate
ASSETS
Earning assets:
Loans (1)	$	6,671,344		$	76,744		4.56	%	$	5,376,278		$	75,446		5.57	%
Securities – taxable		591,933			2,032		1.36			427,152			2,361		2.19
Securities – tax exempt		33,785			166		1.95			17,399			130		2.96
Federal funds sold and interest-bearing deposits with banks		1,567,437			422		0.11			1,577,446			8,705		2.19
Total earning assets		8,864,499			79,364		3.55			7,398,275			86,642		4.65
Nonearning assets:
Cash and due from banks		241,160								178,862
Interest receivable and other assets		619,570								500,067
Allowance for credit losses		(88,823	)							(56,056	)
Total nonearning assets		771,907								622,873
Total assets	$	9,636,406							$	8,021,148
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction deposits	$	678,447		$	125		0.07	%	$	737,162		$	646		0.35	%
Savings deposits		3,393,158			890		0.10			2,835,855			10,127		1.42
Time deposits		699,074			1,839		1.04			690,867			2,871		1.65
Short-term borrowings		3,117			—		0.05			1,063			7		2.72
Long-term borrowings		2,119			—		—			—			—		—
Junior subordinated debentures		26,804			491		7.27			26,804			491		7.27
Total interest-bearing liabilities		4,802,719			3,345		0.28			4,291,751			14,142		1.31
Interest-free funds:
Noninterest-bearing deposits		3,722,973								2,720,830
Interest payable and other liabilities		60,574								49,262
Stockholders’ equity		1,050,140								959,305
Total interest free funds		4,833,687								3,729,397
Total liabilities and stockholders’ equity	$	9,636,406							$	8,021,148
Net interest income				$	76,019							$	72,500
Net interest spread							3.27	%							3.34	%
Effect of interest free funds							0.13	%							0.55	%
Net interest margin							3.40	%							3.89	%

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 Report on Form 8-K dated ~~March 30, 2015~~July 27, 2021 and incorporated herein by reference).

~~3.2~~3.2*		~~Certificate of Amendment of the Third Amended and~~ Restated Certificate of Incorporation of BancFirst Corporation dated ~~May 31, 2017 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated May 31, 2017 and incorporated herein by reference).~~August 5, 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).

~~4.8~~		Form of Guarantee Agreement by and between CSB Bancshares, Inc. and Wilmington Trust Company (filed as Exhibit 4.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 and incorporated herein by reference).

~~4.9~~		Form of Indenture relating to the Floating Rate Junior Subordinated Deferrable Interest Debentures of CSB Bancshares, Inc., issued to Wilmington Trust Company (filed as Exhibit 4.8 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 and incorporated herein by reference).

~~4.10~~		Form of First Supplemental Indenture relating to the Floating Rate Junior Subordinated Deferrable Interest Debentures by and between Wilmington Trust Company and BancFirst Corporation (filed as Exhibit 4.9 to the Company’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2015 and incorporated herein by reference).

10.1		BancFirst Corporation Employee Stock Ownership and Trust Agreement adopted effective January 1, 2015 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2015 and incorporated herein by reference).
10.2		Amendment Number One to the BancFirst Corporation Employee Stock Ownership Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated February 26, 2018 and incorporated herein by reference).

10.3		BancFirst Corporation Employee Stock Ownership Plan 2019 Amendment Number One (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference).

10.4		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).
~~10.4~~10.5		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).

Exhibit Number10.6		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).

10.7		~~10.5~~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).

10.8		Purchase and Sale Agreement and Escrow Instructions by and between Cotter Tower – Oklahoma L.P. and BancFirst Corporation. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated September 5, 2018 and incorporated herein by reference).

~~10.6~~Exhibit Number		Exhibit
10.9		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).

~~10.7~~10.10*		~~Sixth~~ Amended and Restated BancFirst Corporation ~~Directors’ Deferred~~ Stock ~~Compensation Plan (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2019 and incorporated herein by reference).~~Option Plan.

~~10.8~~10.11*		Amended and Restated BancFirst Corporation ~~Employee~~Non-Employee Directors’ Stock ~~Ownership Plan 2019 Amendment Number One (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated herein by reference).~~Option Plan.

~~10.9~~10.12*		~~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).~~
~~10.10~~		~~Seventh~~ Amended and Restated BancFirst Corporation ~~Non-Employee~~ Directors’ Deferred Stock ~~Option Plan (filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2020 and incorporated herein by reference).~~Compensation Plan.

~~10.11~~		Sixteenth Amended and Restated BancFirst Corporation Stock Option Plan (filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2020 and incorporated herein by reference).

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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104*		Cover page Interactive Data File (formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101)

		BANCFIRST CORPORATION
		(Registrant)

Date: ~~November~~August 9, ~~2020~~2021		/s/ David Harlow
		David Harlow
		President
		Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November~~August 9, ~~2020~~2021		/s/ Kevin Lawrence
		Kevin Lawrence
		Executive Vice President
		Chief Financial Officer
		(Principal Financial Officer)