As of December 31, 2020, 2019 and 2018 the Company’s authorized and outstanding preferred and common stock was as follows:

(a) Senior Preferred Stock: No shares issued or outstanding. Shares may be issued with such voting, dividend, redemption, sinking fund, conversion, exchange, liquidation and other rights as shall be determined by the Company’s Board of Directors, without approval of the stockholders. The Senior Preferred Stock would have a preference over common stock as to payment of dividends, as to the right to distribution of assets upon redemption of such shares or upon liquidation of the Company.

(b) 10% Cumulative Preferred Stock: Redeemable at the Company’s option at $5.00 per share plus accumulated dividends; non-voting; cumulative dividends at the rate of 10% payable semi-annually on January 15 and July 15; no shares issued or outstanding.

In November 1999, the Company adopted a Stock Repurchase Program (the “SRP”). The SRP may be used as a means to increase earnings per share and return on equity, 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.

The Company’s ability to pay dividends is dependent upon dividend payments received from BancFirst. Banking regulations limit bank dividends based upon net earnings retained and minimum capital requirements. Dividends in excess of these requirements require regulatory approval. At January 1, 2021, approximately $102.1 million of the equity of BancFirst was available for dividend payments to the Company. During any deferral period or any event of default on the Junior Subordinated Debentures, the Company may not declare or pay any dividends on any of its capital stock.

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 December 31, 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:

						Required								To Be Well
						For Capital			With					Capitalized Under
						Adequacy			Capital Conservation					Prompt Corrective
	Actual					Purposes			Buffer					Action Provisions
	Amount		Ratio			Amount		Ratio	Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
As of December 31, 2020:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	997,383		15.64	%	$	510,110	8.00%	$	669,519		10.50	%	N/A		N/A
BancFirst		898,714		15.59	%		461,142	8.00%		605,248		10.50	%	$	576,427		10.00	%
Pegasus Bank		70,922		11.85	%		47,893	8.00%		62,860		10.50	%		59,866		10.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	891,534		13.98	%	$	286,937	4.50%	$	446,346		7.00	%	N/A		N/A
BancFirst		806,478		13.99	%		259,392	4.50%		403,499		7.00	%	$	374,678		6.50	%
Pegasus Bank		66,150		11.05	%		26,940	4.50%		41,906		7.00	%		38,913		6.50	%
Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	917,534		14.39	%	$	382,583	6.00%	$	541,992		8.50	%	N/A		N/A
BancFirst		826,478		14.34	%		345,856	6.00%		489,963		8.50	%	$	461,142		8.00	%
Pegasus Bank		66,150		11.05	%		35,920	6.00%		50,886		8.50	%		47,893		8.00	%
Tier 1 Capital
(to Total Assets)-
BancFirst Corporation	$	917,534		9.63	%	$	380,952	4.00%	N/A		N/A			N/A		N/A
BancFirst		826,478		9.48	%		348,666	4.00%	N/A		N/A			$	435,833		5.00	%
Pegasus Bank		66,150		8.10	%		32,682	4.00%	N/A		N/A				40,852		5.00	%
As of December 31, 2019:
Total Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	910,561		14.42	%	$	505,050	8.00%	$	662,878		10.50	%	N/A		N/A
BancFirst		827,928		14.14	%		468,107	8.00%		614,390		10.50	%	$	585,134		10.00	%
Pegasus Bank		63,817		14.15	%		36,083	8.00%		47,359		10.50	%		45,104		10.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	830,323		13.15	%	$	284,091	4.50%	$	441,919		7.00	%	N/A		N/A
BancFirst		753,659		12.88	%		263,310	4.50%		409,594		7.00	%	$	380,337		6.50	%
Pegasus Bank		60,214		13.35	%		20,297	4.50%		31,573		7.00	%		29,317		6.50	%
Tier 1 Capital
(to Risk Weighted Assets)-
BancFirst Corporation	$	856,323		13.56	%	$	378,788	6.00%	$	536,616		8.50	%	N/A		N/A
BancFirst		773,659		13.22	%		351,080	6.00%		497,364		8.50	%	$	468,107		8.00	%
Pegasus Bank		60,214		13.35	%		27,062	6.00%		38,338		8.50	%		36,083		8.00	%
Tier 1 Capital
(to Total Assets)-
BancFirst Corporation	$	856,323		10.28	%	$	333,171	4.00%	N/A		N/A			N/A		N/A
BancFirst		773,659		10.22	%		302,845	4.00%	N/A		N/A			$	378,556		5.00	%
Pegasus Bank		60,214		8.58	%		28,058	4.00%	N/A		N/A				35,072		5.00	%

As of December 31, 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. 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 zero 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 Company’s PPP loans are included in the calculation of the Company’s leverage ratio as of December 31, 2020 as the Company did not utilize the PPP Facility for funding purposes.

As discussed in Note 1 – Description of Business and Summary of 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. In February 2019, the federal 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-year transition option.