What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-07 · 126 added, 103 removed, 899 unchanged (20% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30,

Cash and due from banks

17 unchanged sentences

Short-term borrowings

Long-term borrowings

Accrued interest payable and other liabilities

20 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

INTEREST INCOME

17 unchanged sentences

Cash management

Gain/(loss) on sale of other assets

(Loss)/gain on sale of other assets

Total noninterest income

4 unchanged sentences

Data processing services

Net income from other real estate owned

Net loss/(income) from other real estate owned

Marketing and business promotion

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Issued at beginning of period

22 unchanged sentences

(Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

9 unchanged sentences

Gain on sale of other assets

Increase in interest receivable

(Increase)/decrease in interest receivable

(Decrease)/increase in interest payable

4 unchanged sentences

Net cash received from acquisitions, net of cash paid

Net decrease in federal funds sold

Net (decrease)/increase in federal funds sold

Purchases of held for investment securities

12 unchanged sentences

Proceeds from long-term borrowings

Paydown of long-term borrowings

Issuance of common stock in connection with stock options, net

1 unchanged sentence

Cash dividends paid

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net (decrease)/increase in cash, due from banks and interest-bearing deposits

5 unchanged sentences

Noncash investing and financing activities:

Cash consideration for acquisitions

Fair value of assets acquired in acquisitions

80 unchanged sentences

Amortized cost is the principal balance outstanding, net of purchase premiums and discounts.

Accrued interest receivable totaled $ 31.0 million at June 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.

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.

99 unchanged sentences

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 June 30, 2020 approximately 95 % of the available for sale securities held by the Company were issued by the U.S.

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.

5 unchanged sentences

The fee is based on the balance of each PPP loan outstanding at the time of full disbursement.

As of June 30, 2020, the Company received approximately $ 30.0 million in processing fees from the SBA.

The unamortized balance of these fees 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.

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.

(2) RECENT DEVELOPMENTS, INCLUDING MERGERS AND ACQUISITIONS

Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications by Financial Institutions provides temporary relief from the accounting and reporting requirements for TDRs regarding certain loan modifications related to COVID-19 that are offered by financial institutions

Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications by Financial Institutions provide temporary relief from the accounting and reporting requirements for TDRs regarding certain loan modifications related to COVID-19 that are offered by financial institutions

Specifically, the CARES Act provides that a financial institution may elect to suspend (1) the requirements under U.S.

7 unchanged sentences

Furthermore, even when the exception is applied, an entity may determine that it is appropriate to place the loan on nonaccrual status.

As of June 30, 2020, the Company has identified $ 939.8 million in loans that have been modified according to these terms.

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 of 2021 and is subject to regulatory approval.

On March 5, 2020 , the Company purchased approximately $ 47.8 million in total assets, which included $ 22.9 million in loans, and assumed approximately $ 45.0 million in deposits and certain other obligations of The Citizens State Bank of Okemah, Oklahoma “Citizens” for a purchase price of $ 2.9 million.

8 unchanged sentences

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

June 30, 2020

September 30, 2020

(Dollars in thousands)

7 unchanged sentences

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

June 30, 2020

September 30, 2020

(Dollars in thousands)

12 unchanged sentences

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been presented at their contractual maturity.

June 30, 2020

September 30, 2020

December 31, 2019

14 unchanged sentences

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

June 30, 2020

September 30, 2020

December 31, 2019

4 unchanged sentences

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

June 30, 2020

September 30, 2020

December 31, 2019

9 unchanged sentences

Other loans (2)

(1) Excludes accrued interest receivable of $ 31.0 million at June 30, 2020 and $ 27.4 million at December 31, 2019, that is recorded in accrued interest receivable and other assets.

(2) Includes PPP loans of $ 825.1 million, net of unamortized processing fees of $ 26.2 million, at June 30, 2020.

(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.

BancFirst’s loans are mostly to customers within Oklahoma and approximately 50 % of the loans are secured by real estate.

4 unchanged sentences

BancFirst’s commercial and agricultural non-real estate loan category includes upstream and midstream energy loans and loans to companies that provide ancillary services to the energy industry, such as transportation, preparation contractors and equipment manufacturers.

The balance of upstream energy loans was approximately $ 229 million at June 30, 2020 and approximately $ 189 million at December 31, 2019.

The balance of midstream energy loans was approximately $ 45 million at June 30, 2020 and approximately $ 41 million at December 31, 2019.

The balance of the ancillary services energy loans was approximately $ 78 million at June 30, 2020 and approximately $ 90 million at December 31, 2019.

Pegasus Bank’s loans are mostly to customers within Texas and approximately $ 246 million or 51 % of the loans are secured by real estate at June 30, 2020.

Pegasus Bank’s commercial and agricultural non-real estate loan were approximately $ 208 million at June 30, 2020 and approximately $ 172 million at December 31, 2019.

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 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, such as transportation, preparation contractors and equipment manufacturers.

The balance of upstream energy loans was approximately $ 88 million at June 30, 2020 and approximately $ 57 million at December 31, 2019.

The balance of the ancillary services energy loans was approximately $ 8 million at June 30, 2020 and approximately $ 7 million at December 31, 2019.

As of June 30, 2020, the Company reported $ 825.1 million in PPP loans, net of unamortized processing fees of $ 26.2 million and recognized $ 3.6 million of processing fees, which were included in interest income.

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.

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.

Troubled Debt Restructur ings and Other Real Estate Owned and Repossessed Assets

Troubled Debt Restructur ings , 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,

(Dollars in thousands)

3 unchanged sentences

The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material.

At September 30, 2020, the Company’s principal subsidiary bank, BancFirst, had approximately $ 21.5 million in loans at its Hugo, Oklahoma branch that it has entered into an agreement to sell to AmeriState Bank in Atoka, Oklahoma.

Accordingly, as of September 30, 2020, the Company has transferred $ 21.5 million from loans held for investment (net of unearned interest) to loans held for sale.

Nonaccrual loans

Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $ 983,000 for the six months ended June 30, 2020 and approximately $ 1.0 million for the six months ended June 30, 2019.

In addition, approximately $ 8.0 million of nonaccrual loans are guaranteed by government agencies.

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

Approximately $ 8.4 million of nonaccrual loans are guaranteed by government agencies.

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.

June 30, 2020

September 30, 2020

(Dollars in thousands)

20 unchanged sentences

(Dollars in thousands)

As of June 30, 2020

As of September 30, 2020

Commercial real estate owner occupied

14 unchanged sentences

Acquired loans

Due to the impacts of the COVID-19 pandemic, the Company has modified approximately $ 939.8 million in loans, most of which are secured by commercial real estate.

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 will 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.

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 in the table above.

9 unchanged sentences

(Dollars in thousands)

As of June 30, 2020

As of September 30, 2020

Commercial real estate owner occupied

22 unchanged sentences

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 $ 38.9 million provision for credit losses for the first six months of 2020 utilizing the newly adopted CECL methodology, a significant increase from the first six 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 growth during the first six months of 2020.

Subsequent to the adoption of ASC 326, the Company recorded a $ 57.7 million provision for credit losses for the first nine months of 2020 utilizing the newly adopted CECL methodology, a significant increase from the first nine months of 2019.

Prolonged low energy prices will not only have a direct impact on the energy portfolio;

7 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Commercial real estate owner occupied

6 unchanged sentences

Consumer non-real estate

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Commercial real estate owner occupied

9 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Non-residential real estate owner occupied

5 unchanged sentences

Acquired loans

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Non-residential real estate owner occupied

12 unchanged sentences

(Dollars in thousands)

For the period ended June 30, 2020

Purchase price of loans at acquisition

Allowance for credit losses at acquisition

Par value of acquired loans at acquisition

For the period ended September 30, 2020

Purchase price of acquired loans

Allowance for credit losses of acquired loans

Par value of acquired loans

Collateral Dependent Loans

5 unchanged sentences

(Dollars in thousands)

As of June 30, 2020

As of September 30, 2020

Commercial real estate owner occupied

10 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

(Dollars in thousands)

4 unchanged sentences

(Dollars in thousands)

As of June 30, 2020

As of September 30, 2020

Core deposit intangibles

5 unchanged sentences

(Dollars in thousands)

Six months ended June 30, 2020

Nine months ended September 30, 2020

Balance at beginning of period

3 unchanged sentences

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 $ 453,000 and $ 376,000 for the three months ended June 30, 2020 and June 30, 2019, respectively.

Rent expense for all operating leases, including those rented on a monthly or temporary basis totaled approximately $ 916,000 and $ 767,000 for the six months ended June 30, 2020 and June 30, 2019, respectively.

As of June 30, 2020, right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled $ 4.8 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $ 4.6 million.

Rent expense for all operating leases, including those rented on a monthly or temporary basis totaled approximately $ 504,000 and $ 392,000 for the three months ended September 30, 2020 and September 30, 2019, respectively.

Rent expense for all operating leases, including those rented on a monthly or temporary basis totaled approximately $ 1.4 million and $ 1.2 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

As of September 30, 2020, right of use lease asset included in accrued interest receivable and other assets on the balance sheet totaled $ 4.3 million, and a related lease liability included in accrued interest payable and other liabilities on the balance sheet totaled $ 4.2 million.

There have been no significant changes in our expected future minimum lease payments since December 31, 2019.

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.

As of June 30, 2020, our operating leases have a weighted-average remaining lease term of 3.2 years and a weighted-average discount rate of 3.3 percent.

As of September 30, 2020, our operating leases have a weighted-average remaining lease term of 3.4 years and a weighted-average discount rate of 3.3 percent.

Maturity of Operating Lease Liabilities

June 30, 2020

September 30, 2020

(Dollars in thousands)

2020 (six months)

2020 (three months)

Total lease payments

3 unchanged sentences

These assets are classified on the balance sheet as premises and equipment.

The Company had operating lease revenue of $ 1.4 million and $ 1.5 million for the three months ended June 30, 2020 and June 30, 2019, respectively.

The Company had operating lease revenue of $ 2.8 million and $ 3.1 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

The Company had operating lease revenue of $ 1.3 million and $ 1.6 million for the three months ended September 30, 2020 and September 30, 2019, respectively.

The Company had operating lease revenue of $ 4.1 million and $ 4.7 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

Lease revenue is included in occupancy, net on the consolidated statement of comprehensive income.

2 unchanged sentences

The following table presents the scheduled minimum future contractual rent to be received under the remaining non-cancelable term of the operating leases:

June 30, 2020

September 30, 2020

(Dollars in thousands)

2020 (six months)

2020 (three months)

Total future minimum lease payments

1 unchanged sentence

The Company has had a nonqualified incentive stock option plan (the “BancFirst ISOP”) since May 1986.

At June 30, 2020, there were 330,000 shares available for future grants.

At September 30, 2020, there were 321,500 shares available for future grants.

The BancFirst ISOP will terminate on December 31, 2024 , if not extended.

4 unchanged sentences

Each non-employee director is granted an option for 10,000 shares.

At June 30, 2020, there were 30,000 shares available for future grants.

At September 30, 2020, there were 30,000 shares available for future grants.

The BancFirst Directors’ Stock Option Plan will terminate on December 31, 2024 , if not extended.

4 unchanged sentences

(Dollars in thousands, except option data)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Outstanding at December 31, 2019

2 unchanged sentences

Options canceled, forfeited, or expired

Outstanding at June 30, 2020

Exercisable at June 30, 2020

Outstanding at September 30, 2020

Exercisable at September 30, 2020

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in thousands)

4 unchanged sentences

The following table shows the unearned stock-based compensation expense:

June 30, 2020

September 30, 2020

(Dollars in thousands)

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

September 30,

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

14 unchanged sentences

The Company has had the BancFirst Corporation Directors’ Deferred Stock Compensation Plan (the “BancFirst Deferred Stock Compensation Plan”) since May 1999.

As of June 30, 2020, there are 28,582 shares available for future issuance under the BancFirst Deferred Stock Compensation Plan.

As of September 30, 2020, there are 24,982 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.

2 unchanged sentences

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 and 8,362 shares of common stock distributed from the BancFirst Deferred Stock Compensation Plan during the six months ended June 30, 2020 and June 30, 2019, respectively.

There were 1,307 and 9,542 shares of common stock distributed from the BancFirst Deferred Stock Compensation Plan during the nine months ended September 30, 2020 and September 30, 2019, respectively.

A summary of the accumulated stock units is as follows:

September 30,

Accumulated stock units

6 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

Number of shares repurchased

4 unchanged sentences

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 June 30, 2020, the Company, BancFirst and Pegasus Bank met all capital adequacy requirements to which they are subject.

Management believes that as of September 30, 2020, 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:

4 unchanged sentences

(Dollars in thousands)

As of June 30, 2020:

As of September 30, 2020:

Total Capital

10 unchanged sentences

BancFirst Corporation

As of June 30, 2020, 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.

As of September 30, 2020, 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.

7 unchanged sentences

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 are included in the calculation of the Company’s leverage ratio as of June 30, 2020 as the Company did not utilize the PPP Facility for funding purposes.

The PPP loans the Company originated in the second quarter of 2020 are included in the calculation of the Company’s leverage ratio as of September 30, 2020 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, the Company recognized an after-tax cumulative effect reduction to retained earnings totaling $ 2.3 million.

8 unchanged sentences

(Dollars in thousands, except per share data)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Income available to common stockholders

2 unchanged sentences

exercises of stock options

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Income available to common stockholders

2 unchanged sentences

exercises of stock options

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Income available to common stockholders

2 unchanged sentences

exercises of stock options

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Income available to common stockholders

3 unchanged sentences

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:

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

FAIR VALUE MEASUREMENTS

35 unchanged sentences

(Dollars in thousands)

June 30, 2020

September 30, 2020

Securities available for sale:

10 unchanged sentences

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

Six Months Ended

Nine Months Ended

September 30,

Twelve Months Ended

2 unchanged sentences

Transfers from level 2

Total unrealized losses

Total unrealized gains/(losses)

Balance at the end of the period

The Company’s policy is to recognize transfers in and transfers out of Levels 1, 2 and 3 as of the end of the reporting period.

During the six months ended June 30, 2020, the Company transferred 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 nine months ended September 30, 2020, the Company transferred 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 no t transfer any securities between levels in the fair value hierarchy.

16 unchanged sentences

(Dollars in thousands)

As of and for the Year-to-date Period Ended June 30, 2020

As of and for the Year-to-date Period Ended September 30, 2020

Equity securities

24 unchanged sentences

Mortgage loans are generally sold within 30 days of origination.

Loans held for sale are valued using Level 2 inputs.

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.

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.

6 unchanged sentences

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

Long-Term Borrowings

The fair values of fixed-rate long-term borrowings are estimated using rates that would be charged for borrowings of similar remaining maturities.

Junior Subordinated Debentures

4 unchanged sentences

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,

(Dollars in thousands)

11 unchanged sentences

Short-term borrowings

Long-term borrowings

Junior subordinated debentures

6 unchanged sentences

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 no t considered to be significant to the Company at June 30, 2020 or December 31, 2019.

The overall levels of non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis were no t considered to be significant to the Company at September 30, 2020 or December 31, 2019.

(11) SEGMENT INFORMATION

7 unchanged sentences

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 four business units are as follows:

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

(Dollars in thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Net interest income

1 unchanged sentence

Income before taxes

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Net interest income

1 unchanged sentence

Income before taxes

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Net interest income

1 unchanged sentence

Income before taxes

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Net interest income

2 unchanged sentences

Total Assets:

June 30, 2020

September 30, 2020

December 31, 2019

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements