(4)	LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

	September 30, 2015					December 31, 2014
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Commercial and financial:
Commercial and industrial	$	759,935		19.19	%	$	745,106		19.35	%
Oil & gas production and equipment		68,943		1.74			104,940		2.72
Agriculture		112,675		2.84			132,830		3.45
State and political subdivisions:
Taxable		17,674		0.45			20,431		0.53
Tax-exempt		28,855		0.73			20,952		0.54
Real estate:
Construction		382,883		9.67			356,621		9.26
Farmland		163,989		4.14			149,507		3.88
One to four family residences		797,974		20.15			766,362		19.90
Multifamily residential properties		63,016		1.59			66,766		1.73
Commercial		1,250,673		31.59			1,191,477		30.94
Consumer		281,800		7.12			267,179		6.94
Other (not classified above)		31,252		0.79			29,227		0.76
Total loans	$	3,959,669		100.00	%	$	3,851,398		100.00	%

The Company’s loans are mostly to customers within Oklahoma and over 65% of the loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual 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.

Accounting policies related to appraisals, nonaccruals and charge-offs are disclosed in Note (1) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Nonperforming and Restructured Assets

The following is a summary of nonperforming and restructured assets:

	September 30,		December 31,
	2015		2014
	(Dollars in thousands)
Past due 90 days or more and still accruing	$	2,061	$	1,135
Nonaccrual		30,321		16,410
Restructured		15,386		16,515
Total nonperforming and restructured loans		47,768		34,060
Other real estate owned and repossessed assets		7,863		8,079
Total nonperforming and restructured assets	$	55,631	$	42,139

Nonaccrual loans, accruing loans past due 90 days or more, and restructured loans are shown in the table above. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.5 million for the nine months ended September 30, 2015 and approximately $839,000 for the nine months ended September 30, 2014.

Restructured loans consisted primarily of one relationship restructured to defer principal payments. The relationship was evaluated by management and determined to be well collateralized. Additionally, none of the concessions granted involved a principal reduction or a change from the current market rate of interest. The collateral value is monitored periodically to evaluate possible impairment. 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 restructured were not considered to be material.

Loans are segregated into classes based upon the nature of the collateral and the borrower. These classes are used to estimate the credit risk component in the allowance for loan losses.

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

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied	$	183	$	296
Non-residential real estate other		4,878		5,126
Residential real estate permanent mortgage		517		681
Residential real estate all other		1,222		1,796
Commercial and financial:
Non-consumer non-real estate		13,458		1,556
Consumer non-real estate		198		250
Other loans		5,761		1,659
Acquired loans		4,104		5,046
Total	$	30,321	$	16,410

The following table presents an age analysis of past due loans, segregated by class of 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
	(Dollars in thousands)
As of September 30, 2015
Real estate:
Non-residential real estate owner occupied	$	223	$	391	$	99	$	713	$	492,565	$	493,278	$	99
Non-residential real estate other		2,035		61		1,162		3,258		1,033,981		1,037,239		317
Residential real estate permanent mortgage		1,108		328		1,028		2,464		322,673		325,137		788
Residential real estate all other		1,279		89		967		2,335		660,700		663,035		420
Commercial and financial:
Non-consumer non-real estate		2,690		949		209		3,848		930,554		934,402		22
Consumer non-real estate		1,700		616		297		2,613		265,755		268,368		264
Other loans		562		174		5,211		5,947		155,379		161,326		65
Acquired loans		743		548		1,313		2,604		74,280		76,884		86
Total	$	10,340	$	3,156	$	10,286	$	23,782	$	3,935,887	$	3,959,669	$	2,061
As of December 31, 2014
Real estate:
Non-residential real estate owner occupied	$	635	$	—	$	269	$	904	$	482,731	$	483,635	$	70
Non-residential real estate other		377		317		825		1,519		952,484		954,003		—
Residential real estate permanent mortgage		2,010		758		544		3,312		304,267		307,579		172
Residential real estate all other		1,820		194		1,488		3,502		633,586		637,088		387
Commercial and financial:
Non-consumer non-real estate		841		71		793		1,705		965,002		966,707		24
Consumer non-real estate		1,914		711		330		2,955		244,810		247,765		215
Other loans		1,858		916		741		3,515		149,469		152,984		—
Acquired loans		1,815		997		1,304		4,116		97,521		101,637		267
Total	$	11,270	$	3,964	$	6,294	$	21,528	$	3,829,870	$	3,851,398	$	1,135

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect the full amount of scheduled principal and interest payments in accordance with the original contractual terms of the loan agreement. If a loan is impaired, a specific valuation allowance may be allocated if necessary so that the loan is reported, net of allowance for loss, at the present value of future cash flows using the loan’s existing rate, or the fair value of collateral if repayment is expected solely from the collateral.

The following table presents impaired loans, segregated by class of loans. No material amount of interest income was recognized on impaired loans subsequent to their classification as impaired.

	Impaired Loans
	Unpaid Principal Balance		Recorded Investment with Allowance		Related Allowance		Average Recorded Investment
	(Dollars in thousands)
As of September 30, 2015
Real estate:
Non-residential real estate owner occupied	$	495	$	410	$	15	$	374
Non-residential real estate other		22,982		19,906		758		19,969
Residential real estate permanent mortgage		1,676		1,456		68		1,126
Residential real estate all other		2,047		1,806		177		1,892
Commercial and financial:
Non-consumer non-real estate		15,940		13,481		2,555		16,393
Consumer non-real estate		657		636		122		596
Other loans		5,902		5,826		157		5,882
Acquired loans		7,373		4,890		—		5,085
Total	$	57,072	$	48,411	$	3,852	$	51,317

As of December 31, 2014
Real estate:
Non-residential real estate owner occupied	$	521	$	448	$	15	$	453
Non-residential real estate other		23,154		21,164		1,364		21,522
Residential real estate permanent mortgage		1,095		880		85		1,042
Residential real estate all other		2,480		2,270		299		2,273
Commercial and financial:
Non-consumer non-real estate		1,895		1,580		431		1,646
Consumer non-real estate		664		648		138		602
Other loans		2,101		1,659		228		1,512
Acquired loans		10,933		7,708		—		8,082
Total	$	42,843	$	36,357	$	2,560	$	37,132

Credit Risk Monitoring and Loan Grading

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.

An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions.

The general characteristics of the risk grades are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The following table presents internal loan grading by class of loans:

	Internal Loan Grading
	Grade
		1		2		3		4		5	Total
	(Dollars in thousands)
As of September 30, 2015
Real estate:
Non-residential real estate owner occupied	$	408,259	$	78,173	$	6,663	$	183	$	—	$	493,278
Non-residential real estate other		872,939		129,399		30,023		4,878		—		1,037,239
Residential real estate permanent mortgage		288,436		29,520		6,393		788		—		325,137
Residential real estate all other		544,388		106,840		10,200		1,607		—		663,035
Commercial and financial:
Non-consumer non-real estate		775,900		133,200		11,804		13,498		—		934,402
Consumer non-real estate		252,581		13,583		1,690		512		2		268,368
Other loans		153,197		4,696		1,027		2,406		—		161,326
Acquired loans		53,350		10,347		8,727		4,311		149		76,884
Total	$	3,349,050	$	505,758	$	76,527	$	28,183	$	151	$	3,959,669

As of December 31, 2014
Real estate:
Non-residential real estate owner occupied	$	402,706	$	75,555	$	5,008	$	366	$	—	$	483,635
Non-residential real estate other		795,209		133,542		20,126		5,126		—		954,003
Residential real estate permanent mortgage		272,411		27,855		6,369		944		—		307,579
Residential real estate all other		529,555		99,214		6,146		2,173		—		637,088
Commercial and financial:
Non-consumer non-real estate		821,094		117,457		26,550		1,606		—		966,707
Consumer non-real estate		233,424		12,229		1,548		564		—		247,765
Other loans		147,758		4,261		601		173		191		152,984
Acquired loans		46,465		36,951		12,651		5,206		364		101,637
Total	$	3,248,622	$	507,064	$	78,999	$	16,158	$	555	$	3,851,398

Allowance for Loan Losses Methodology

The allowance for loan losses (“ALL”) methodology is disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The following table details activity in the ALL by class of 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.

	ALL
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provisions charged to operations			Balance at end of period
	(Dollars in thousands)
Three Months Ended September 30, 2015
Real estate:
Non-residential real estate owner occupied	$	4,503	$	—		$	—	$	—		$	36		$	4,539
Non-residential real estate other		9,880		(708	)		1		(707	)		814			9,987
Residential real estate permanent mortgage		3,110		(28	)		15		(13	)		(26	)		3,071
Residential real estate all other		6,485		(48	)		4		(44	)		168			6,609
Commercial and financial:
Non-consumer non-real estate		13,713		(2,180	)		38		(2,142	)		86			11,657
Consumer non-real estate		2,499		(152	)		35		(117	)		160			2,542
Other loans		2,431		(20	)		6		(14	)		134			2,551
Acquired loans		—		(38	)		—		(38	)		52			14
Total	$	42,621	$	(3,174	)	$	99	$	(3,075	)	$	1,424		$	40,970

Nine Months Ended September 30, 2015
Real estate:
Non-residential real estate owner occupied	$	4,406	$	(1	)	$	1	$	—		$	133		$	4,539
Non-residential real estate other		9,616		(708	)		2		(706	)		1,077			9,987
Residential real estate permanent mortgage		2,948		(124	)		29		(95	)		218			3,071
Residential real estate all other		6,269		(123	)		13		(110	)		450			6,609
Commercial and financial:
Non-consumer non-real estate		12,771		(2,349	)		76		(2,273	)		1,159			11,657
Consumer non-real estate		2,404		(382	)		90		(292	)		430			2,542
Other loans		2,359		(283	)		15		(268	)		460			2,551
Acquired loans		116		(232	)		28		(204	)		102			14
Total	$	40,889	$	(4,202	)	$	254	$	(3,948	)	$	4,029		$	40,970

	ALL
	Balance at beginning of period		Charge- offs			Recoveries		Net charge-offs			Provisions charged to operations			Balance at end of period
	(Dollars in thousands)
Three Months Ended September 30, 2014
Real estate:
Non-residential real estate owner occupied	$	5,241	$	—		$	20	$	20		$	(798	)	$	4,463
Non-residential real estate other		11,238		(29	)		45		16			(1,784	)		9,470
Residential real estate permanent mortgage		3,310		(12	)		18		6			(464	)		2,852
Residential real estate all other		6,815		(23	)		9		(14	)		(649	)		6,152
Commercial and financial:
Non-consumer non-real estate		11,967		(391	)		21		(370	)		412			12,009
Consumer non-real estate		2,645		(177	)		58		(119	)		(132	)		2,394
Other loans		1,993		(93	)		8		(85	)		219			2,127
Acquired loans		88		(201	)		32		(169	)		81			—
Total	$	43,297	$	(926	)	$	211	$	(715	)	$	(3,115	)	$	39,467

Nine Months Ended September 30, 2014
Real estate:
Non-residential real estate owner occupied	$	4,827	$	(22	)	$	85	$	63		$	(427	)	$	4,463
Non-residential real estate other		11,026		(29	)		48		19			(1,575	)		9,470
Residential real estate permanent mortgage		2,825		(174	)		59		(115	)		142			2,852
Residential real estate all other		6,708		(116	)		23		(93	)		(463	)		6,152
Commercial and financial:
Non-consumer non-real estate		8,977		(522	)		51		(471	)		3,503			12,009
Consumer non-real estate		2,556		(508	)		166		(342	)		180			2,394
Other loans		1,991		(344	)		135		(209	)		345			2,127
Acquired loans		124		(366	)		715		349			(473	)		—
Total	$	39,034	$	(2,081	)	$	1,282	$	(799	)	$	1,232		$	39,467

The following table details the amount of ALL by class of loans for the period presented, detailed on the basis of the impairment methodology used by the Company.

	ALL
	September 30, 2015				December 31, 2014

	Individually evaluated for impairment		Collectively evaluated for impairment		Individually evaluated for impairment		Collectively evaluated for impairment
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied.	$	257	$	4,282	$	202	$	4,204
Non-residential real estate other		1,321		8,666		1,518		8,098
Residential real estate permanent mortgage		380		2,691		407		2,541
Residential real estate all other		865		5,744		743		5,526
Commercial and financial:
Non-consumer non-real estate		3,712		7,945		4,671		8,100
Consumer non-real estate		352		2,190		372		2,032
Other loans		52		2,499		214		2,145
Acquired loans		—		14		—		116
Total	$	6,939	$	34,031	$	8,127	$	32,762

The following table details the loans outstanding by class of loans for the period presented, on the basis of the impairment methodology used by the Company.

	Loans
	September 30, 2015						December 31, 2014
	Individually evaluated for impairment		Collectively evaluated for impairment		Loans acquired with deteriorated credit quality		Individually evaluated for impairment		Collectively evaluated for impairment		Loans acquired with deteriorated credit quality
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied	$	6,846	$	486,432	$	—	$	5,374	$	478,261	$	—
Non-residential real estate other		34,900		1,002,339		—		25,251		928,752		—
Residential real estate permanent mortgage		7,181		317,956		—		7,313		300,266		—
Residential real estate all other		11,807		651,228		—		8,319		628,769		—
Commercial and financial:
Non-consumer non-real estate		25,302		909,100		—		28,156		938,551		—
Consumer non-real estate		2,199		266,169		—		2,112		245,653		—
Other loans		166		161,160		—		233		152,751		—
Acquired loans		—		63,697		13,187		—		83,416		18,221
Total	$	88,401	$	3,858,081	$	13,187	$	76,758	$	3,756,419	$	18,221

Transfers from Loans

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

	Nine Months Ended September 30,
	2015		2014
	(Dollars in thousands)
Other real estate owned	$	3,155	$	2,073
Repossessed assets		794		955
Total	$	3,949	$	3,028