Loans Held for Investment and Allowance for Credit Losses on Loans

9 Months Ended

Sep. 30, 2025

Loans Held for Investment and Allowance for Credit Losses on Loans

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

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


	September 30, 2025		December 31, 2024
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied		937,976		931,709
Commercial real estate non-owner occupied		1,703,037		1,578,483
Construction and development < 60 months		661,882		756,662
Construction residential real estate < 60 months		249,539		250,373
Residential real estate first lien		1,486,440		1,431,265
Residential real estate all other		305,294		275,461
Agriculture		445,530		449,190
Commercial non-real estate		1,458,122		1,363,462
Consumer non-real estate		493,900		478,647
Oil and gas		536,527		509,858
Total (1)	$	8,278,247	$	8,025,110
(1) Excludes accrued interest receivable of $41.2 million at September 30, 2025 and $40.9 million at December 31, 2024, that is recorded in accrued interest receivable and other assets.

The Company's loans are currently 83% held by BancFirst and 17% held by Pegasus and Worthington. In addition, approximately 70% of the Company's loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and/or securities. The Company’s interest in collateral is secured through filing mortgages and liens, or by possession of the collateral.

The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Other Real Estate Owned and Repossessed Assets and Loan Modifications

The following is a summary of other real estate owned ("OREO") and repossessed assets:



	September 30, 2025		December 31, 2024
	(Dollars in thousands)
Other real estate owned and repossessed assets	$	53,233	$	33,665

During the nine months ended September 30, 2025 the Company foreclosed on a construction and development real estate loan and recorded $15.6 million in OREO, which was the primary reason for the increase in OREO.

In addition, as of both September 30, 2025 and December 31, 2024, OREO included a commercial real estate property recorded at approximately $31.1 million and $28.1 million, respectively. The increase for this commercial real estate property was due to tenant improvements during the nine months ended September 30, 2025. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in noninterest expense on the consolidated statements of comprehensive income.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
	(Dollars in thousands)
Rental income	$	3,164	$	3,043	$	9,487	$	9,069
Operating expense		2,558		2,601		7,855		7,524

During the nine months ended September 30, 2025, the Company sold property held in other real estate owned for a total loss of $40,000, compared to a total gain of $1.3 million in the nine months ended September 30, 2024.

The Company charges interest on principal balances outstanding on modified loans during deferral periods. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not material. The recorded balance of loans modified during the nine months ended September 30, 2025 was approximately $6.0 million compared to $14.8 million during the year ended December 31, 2024.

Nonaccrual loans

The Company did not recognize any interest income on nonaccrual loans for either the nine months ended September 30, 2025 or 2024. In addition, all loans identified as nonaccrual loans have related allowances for credit losses at September 30, 2025 and December 31, 2024, respectively. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $3.6 million for the nine months ended September 30, 2025 and approximately $2.6 million for the nine months ended September 30, 2024.

Nonaccrual loans guaranteed by government agencies totaled approximately $10.0 million at September 30, 2025 and approximately $9.0 million at December 31, 2024.

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


	September 30, 2025		December 31, 2024
	(Dollars in thousands)
Real estate:
Commercial real estate owner occupied	$	16,165	$	7,957
Commercial real estate non-owner occupied		20,794		8,913
Construction and development < 60 months		1,210		20,445
Construction residential real estate < 60 months		1,759		1,481
Residential real estate first lien		3,930		5,193
Residential real estate all other		473		653
Agriculture		1,730		2,047
Commercial non-real estate		8,867		8,552
Consumer non-real estate		1,414		1,028
Oil and gas		924		1,715
Total	$	57,266	$	57,984

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 tables present an age analysis of the Company's loans held for investment:


	Age Analysis of Past Due Loans
	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 Days or More Past Due
	(Dollars in thousands)
As of September 30, 2025
Real estate:
Commercial real estate owner occupied	$	1,982	$	9,661	$	8,984	$	20,627	$	917,349	$	937,976	$	3,505
Commercial real estate non-owner occupied		1,225		1,510		18,529		21,264		1,681,773		1,703,037		—
Construction and development < 60 months		91		—		1,399		1,490		660,392		661,882		248
Construction residential real estate < 60 months		1,028		—		1,028		2,056		247,483		249,539		82
Residential real estate first lien		6,370		1,272		3,473		11,115		1,475,325		1,486,440		1,286
Residential real estate all other		1,943		463		556		2,962		302,332		305,294		401
Agriculture		1,005		1,203		1,503		3,711		441,819		445,530		457
Commercial non-real estate		2,256		1,605		8,894		12,755		1,445,367		1,458,122		1,462
Consumer non-real estate		2,646		1,073		1,203		4,922		488,978		493,900		518
Oil and gas		100		33		1,412		1,545		534,982		536,527		—
Total	$	18,646	$	16,820	$	46,981	$	82,447	$	8,195,800	$	8,278,247	$	7,959

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

Credit Quality Indicators

The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions. The general characteristics of the risk grades and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2024, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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

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


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Amortized Cost Basis		Total
As of September 30, 2025
Commercial real estate owner occupied
Grade 1	$	75,122	$	70,456	$	92,092	$	117,486	$	84,117	$	170,157	$	12,630	$	622,060
Grade 2		52,310		36,726		29,313		47,634		45,787		55,469		7,883		275,122
Grade 3		1,747		4,024		10,863		4,224		4,269		2,570		138		27,835
Grade 4		—		9,583		599		13		609		2,097		58		12,959
Total commercial real estate owner occupied		129,179		120,789		132,867		169,357		134,782		230,293		20,709		937,976
Commercial real estate non-owner occupied
Grade 1	$	142,429	$	116,888	$	176,137	$	262,651	$	114,698	$	154,866	$	11,887	$	979,556
Grade 2		138,949		66,898		157,707		140,525		101,760		78,531		14,715		699,085
Grade 3		3,356		—		666		930		513		—		—		5,465
Grade 4		—		17,840		115		64		262		28		—		18,309
Grade 5		—		622		—		—		—		—		—		622
Total commercial real estate non-owner occupied		284,734		202,248		334,625		404,170		217,233		233,425		26,602		1,703,037
Construction and development < 60 months
Grade 1	$	90,161	$	84,331	$	75,901	$	86,717	$	6,482	$	12,135	$	30,238	$	385,965
Grade 2		85,003		45,142		77,790		36,836		1,901		15,312		9,413		271,397
Grade 3		3,069		32		37		35		—		117		—		3,290
Grade 4		59		—		—		816		216		139		—		1,230
Total construction and development < 60 months		178,292		129,505		153,728		124,404		8,599		27,703		39,651		661,882
Construction residential real estate < 60 months
Grade 1	$	114,433	$	27,539	$	1,948	$	2,229	$	88	$	447	$	5,385	$	152,069
Grade 2		68,991		19,229		36		212		—		—		5,549		94,017
Grade 3		1,337		250		—		—		—		—		108		1,695
Grade 4		813		622		117		206		—		—		—		1,758
Total construction residential real estate < 60 months		185,574		47,640		2,101		2,647		88		447		11,042		249,539
Residential real estate first lien
Grade 1	$	189,404	$	198,149	$	171,404	$	173,988	$	128,007	$	220,927	$	5,147	$	1,087,026
Grade 2		65,536		77,693		52,921		49,467		38,097		64,856		16,879		365,449
Grade 3		6,107		4,737		3,461		2,943		3,254		5,711		—		26,213
Grade 4		263		2,024		1,215		890		1,145		2,215		—		7,752
Total residential real estate first lien		261,310		282,603		229,001		227,288		170,503		293,709		22,026		1,486,440
Residential real estate all other
Grade 1	$	30,361	$	32,299	$	20,433	$	16,989	$	4,688	$	13,500	$	54,635	$	172,905
Grade 2		5,219		6,630		4,810		3,777		1,079		4,373		98,709		124,597
Grade 3		877		667		531		184		276		473		2,960		5,968
Grade 4		472		68		144		68		—		141		931		1,824
Total residential real estate all other		36,929		39,664		25,918		21,018		6,043		18,487		157,235		305,294
Agriculture
Grade 1	$	38,300	$	27,196	$	31,679	$	30,379	$	22,984	$	48,761	$	43,394	$	242,693
Grade 2		42,272		27,054		20,291		15,840		10,998		22,950		41,001		180,406
Grade 3		1,403		1,654		1,933		2,782		1,147		3,792		6,962		19,673
Grade 4		110		743		193		746		284		557		125		2,758
Total Agriculture		82,085		56,647		54,096		49,747		35,413		76,060		91,482		445,530
Commercial non-real estate
Grade 1	$	98,595	$	95,488	$	62,924	$	92,121	$	80,450	$	55,739	$	389,275	$	874,592
Grade 2		91,386		77,032		69,492		36,190		9,123		7,194		244,435		534,852
Grade 3		1,521		1,886		1,916		1,345		359		125		37,068		44,220
Grade 4		823		577		993		910		117		126		262		3,808
Grade 5		—		318		5		217		10		100		—		650
Total commercial non-real estate		192,325		175,301		135,330		130,783		90,059		63,284		671,040		1,458,122
Consumer non-real estate
Grade 1	$	164,226	$	116,451	$	66,756	$	30,515	$	12,935	$	4,518	$	16,981	$	412,382
Grade 2		17,942		15,570		11,644		6,669		2,664		1,040		16,307		71,836
Grade 3		1,081		1,463		1,663		834		530		257		10		5,838
Grade 4		1,875		531		701		494		175		65		3		3,844
Total consumer non-real estate		185,124		134,015		80,764		38,512		16,304		5,880		33,301		493,900
Oil and gas
Grade 1	$	89,940	$	10,827	$	9,121	$	3,508	$	8,234	$	2,643	$	258,117	$	382,390
Grade 2		51,855		7,976		5,628		3,287		2,571		2,709		76,250		150,276
Grade 3		967		17		33		—		154		40		2,270		3,481
Grade 4		—		—		—		—		36		344		—		380
Total oil and gas		142,762		18,820		14,782		6,795		10,995		5,736		336,637		536,527
Total loans held for investment	$	1,678,314	$	1,207,232	$	1,163,212	$	1,174,721	$	690,019	$	955,024	$	1,409,725	$	8,278,247

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


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2025		2024		2023		2022		2021		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Three months ended September 30, 2025
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	29	$	—	$	—	$	—	$	—	$	—	$	29
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		1,006		—		—		—		—		—		1,006
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		6		—		—		35		7		—		48
Residential real estate all other
Current-period gross charge-offs		—		3		22		25		—		—		—		50
Agriculture
Current-period gross charge-offs		—		—		—		7		—		—		—		7
Commercial non-real estate
Current-period gross charge-offs		19		88		55		51		—		36		5		254
Consumer non-real estate
Current-period gross charge-offs		68		340		176		85		40		23		13		745
Oil and gas
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Total current-period gross charge-offs	$	87	$	1,472	$	253	$	168	$	75	$	66	$	18	$	2,139


	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
	(Dollars in thousands)
Three months ended September 30, 2024
Commercial real estate owner occupied
Current-period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate non-owner occupied
Current-period gross charge-offs		—		—		189		—		—		—		—		189
Construction and development < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Construction residential real estate < 60 months
Current-period gross charge-offs		—		—		—		—		—		—		—		—
Residential real estate first lien
Current-period gross charge-offs		—		24		61		—

BANCFIRST CORP /OK/ 10-Q