(4)	LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

	March 31, 2016					December 31, 2015
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Commercial and financial:
Commercial and industrial	$	790,156		18.48	%	$	795,803		18.80	%
Oil & gas production and equipment		86,524		2.02			87,304		2.06
Agriculture		149,442		3.50			150,620		3.56
State and political subdivisions:
Taxable		17,628		0.41			17,605		0.42
Tax-exempt		36,177		0.85			33,575		0.79
Real estate:
Construction		401,330		9.39			403,664		9.54
Farmland		189,934		4.44			184,707		4.36
One to four family residences		825,357		19.31			821,251		19.41
Multifamily residential properties		62,189		1.45			65,477		1.55
Commercial		1,406,204		32.89			1,356,430		32.05
Consumer		276,463		6.47			283,636		6.70
Other (not classified above)		33,708		0.79			31,976		0.76
Total loans	$	4,275,112		100.00	%	$	4,232,048		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, 2015.

Nonperforming and Restructured Assets

The following is a summary of nonperforming and restructured assets:

	March 31,		December 31,
	2016		2015
	(Dollars in thousands)
Past due 90 days or more and still accruing	$	1,099	$	1,841
Nonaccrual		31,040		30,096
Restructured		533		15,143
Total nonperforming and restructured loans		32,672		47,080
Other real estate owned and repossessed assets		4,245		8,214
Total nonperforming and restructured assets	$	36,917	$	55,294

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 $513,000 for the three months ended March 31, 2016 and approximately $310,000 for the three months ended March 31, 2015.

Restructured loans consisted primarily of one relationship restructured in prior periods to defer certain principal payments. This relationship was re-evaluated and removed from restructured loans in 2016 due to sustained improvement in financial condition, performance and the commercially reasonable nature of its structure. 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.

	March 31, 2016		December 31, 2015
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied	$	372	$	261
Non-residential real estate other		3,952		3,957
Residential real estate permanent mortgage		800		656
Residential real estate all other		4,548		1,833
Commercial and financial:
Non-consumer non-real estate		8,283		10,159
Consumer non-real estate		301		312
Other loans		9,343		9,381
Acquired loans		3,441		3,537
Total	$	31,040	$	30,096

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 March 31, 2016
Real estate:
Non-residential real estate owner occupied	$	1,130	$	17	$	254	$	1,401	$	510,687	$	512,088	$	—
Non-residential real estate other		3,563		—		285		3,848		1,135,560		1,139,408		238
Residential real estate permanent mortgage		3,076		632		1,003		4,711		325,107		329,818		445
Residential real estate all other		5,652		339		775		6,766		693,107		699,873		113
Commercial and financial:
Non-consumer non-real estate		2,825		130		487		3,442		975,485		978,927		92
Consumer non-real estate		1,862		676		344		2,882		261,565		264,447		168
Other loans		1,023		347		7,934		9,304		153,567		162,871		12
Acquired loans		1,252		419		615		2,286		185,394		187,680		31
Total	$	20,383	$	2,560	$	11,697	$	34,640	$	4,240,472	$	4,275,112	$	1,099
As of December 31, 2015
Real estate:
Non-residential real estate owner occupied	$	441	$	179	$	183	$	803	$	502,094	$	502,897	$	—
Non-residential real estate other		1,149		108		568		1,825		1,108,935		1,110,760		521
Residential real estate permanent mortgage		2,840		636		648		4,124		328,477		332,601		493
Residential real estate all other		2,842		609		824		4,275		672,414		676,689		193
Commercial and financial:
Non-consumer non-real estate		2,278		161		187		2,626		982,136		984,762		152
Consumer non-real estate		2,237		772		349		3,358		265,511		268,869		278
Other loans		3,565		295		1,761		5,621		156,995		162,616		132
Acquired loans		1,052		71		918		2,041		190,813		192,854		72
Total	$	16,404	$	2,831	$	5,438	$	24,673	$	4,207,375	$	4,232,048	$	1,841

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 Company offers Small Business Administration (“SBA”) guaranteed loans through its Commercial Capital division to expand access to capital for creditworthy small businesses at reasonable terms. The SBA does not provide funds to the borrower, instead, the SBA guarantees a portion of the lender’s loan, which is conditional based on the lender following certain requirements established by the SBA. Typically, if the borrower defaults the SBA pays off the guaranteed portion of the remaining loan balance. However, if any of these requirements are not followed, the SBA can either deny a request for purchase of its guaranteed portion, or reduce the amount of its purchase by the amount of any loss. Because of the volume of SBA guaranteed loans, from time to time the Company may be in negotiation with the SBA regarding the amount of a guarantee that is collectable. If a request is denied, the Company could be required to record additional charge-offs of the previously guaranteed portion of the loan. As of the filing date, collectability on the guarantee for an SBA loan was uncertain; however, the amount of loss, if any, was not estimable.

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 March 31, 2016
Real estate:
Non-residential real estate owner occupied	$	615	$	487	$	15	$	418
Non-residential real estate other		6,207		4,190		157		15,123
Residential real estate permanent mortgage		1,498		1,305		86		1,276
Residential real estate all other		5,101		4,823		1,382		2,781
Commercial and financial:
Non-consumer non-real estate		12,762		8,375		2,017		9,190
Consumer non-real estate		652		609		120		745
Other loans		10,705		9,355		459		9,892
Acquired loans		6,276		3,745		—		3,977
Total	$	43,816	$	32,889	$	4,236	$	43,402

As of December 31, 2015
Real estate:
Non-residential real estate owner occupied	$	507	$	383	$	14	$	446
Non-residential real estate other		21,068		19,052		357		19,655
Residential real estate permanent mortgage		1,401		1,209		81		1,125
Residential real estate all other		2,498		2,235		242		1,958
Commercial and financial:
Non-consumer non-real estate		13,897		10,312		2,062		11,786
Consumer non-real estate		738		715		181		652
Other loans		10,722		9,513		331		10,335
Acquired loans		6,295		4,248		—		4,564
Total	$	57,126	$	47,667	$	3,268	$	50,521

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, 2015.

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 March 31, 2016
Real estate:
Non-residential real estate owner occupied	$	423,003	$	77,243	$	11,470	$	372	$	—	$	512,088
Non-residential real estate other		966,113		163,932		5,379		3,984		—		1,139,408
Residential real estate permanent mortgage		290,540		30,941		7,043		1,294		—		329,818
Residential real estate all other		574,683		112,736		7,649		4,805		—		699,873
Commercial and financial:
Non-consumer non-real estate		809,004		136,143		25,513		8,267		—		978,927
Consumer non-real estate		247,419		14,419		2,099		510		—		264,447
Other loans		153,486		5,629		1,336		2,420		—		162,871
Acquired loans		159,016		13,924		10,991		3,674		75		187,680
Total	$	3,623,264	$	554,967	$	71,480	$	25,326	$	75	$	4,275,112

As of December 31, 2015
Real estate:
Non-residential real estate owner occupied	$	417,529	$	76,749	$	8,304	$	315	$	—	$	502,897
Non-residential real estate other		945,993		156,159		4,580		4,028		—		1,110,760
Residential real estate permanent mortgage		295,265		29,793		6,315		1,228		—		332,601
Residential real estate all other		554,007		111,879		9,109		1,694		—		676,689
Commercial and financial:
Non-consumer non-real estate		821,394		140,384		12,687		10,297		—		984,762
Consumer non-real estate		251,994		14,433		1,779		662		1		268,869
Other loans		153,416		5,851		872		2,477		—		162,616
Acquired loans		165,305		12,566		11,049		3,858		76		192,854
Total	$	3,604,903	$	547,814	$	54,695	$	24,559	$	77	$	4,232,048

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, 2015.

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 March 31, 2016
Real estate:
Non-residential real estate owner occupied	$	4,661	$	(1	)	$	—	$	(1	)	$	172	$	4,832
Non-residential real estate other		9,921		(1	)		1		—			290		10,211
Residential real estate permanent mortgage		3,148		(50	)		17		(33	)		49		3,164
Residential real estate all other		6,725		(67	)		4		(63	)		1,327		7,989
Commercial and financial:
Non-consumer non-real estate		11,754		(803	)		11		(792	)		1,851		12,813
Consumer non-real estate		2,642		(221	)		38		(183	)		94		2,553
Other loans		2,648		(133	)		6		(127	)		269		2,790
Acquired loans		167		(4	)		5		1			51		219
Total	$	41,666	$	(1,280	)	$	82	$	(1,198	)	$	4,103	$	44,571

	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 March 31, 2015
Real estate:
Non-residential real estate owner occupied	$	4,406	$	(1	)	$	1	$	—		$	55	$	4,461
Non-residential real estate other		9,616		—			—		—			282		9,898
Residential real estate permanent mortgage		2,948		(40	)		9		(31	)		67		2,984
Residential real estate all other		6,269		(68	)		5		(63	)		372		6,578
Commercial and financial:
Non-consumer non-real estate		12,771		(153	)		31		(122	)		419		13,068
Consumer non-real estate		2,404		(127	)		15		(112	)		35		2,327
Other loans		2,359		(213	)		9		(204	)		86		2,241
Acquired loans		116		(160	)		26		(134	)		18		—
Total	$	40,889	$	(762	)	$	96	$	(666	)	$	1,334	$	41,557

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
	March 31, 2016				December 31, 2015

	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.	$	444	$	4,388	$	323	$	4,338
Non-residential real estate other		351		9,860		323		9,598
Residential real estate permanent mortgage		438		2,726		399		2,749
Residential real estate all other		1,926		6,063		839		5,886
Commercial and financial:
Non-consumer non-real estate		4,539		8,274		3,365		8,389
Consumer non-real estate		396		2,157		445		2,197
Other loans		413		2,377		291		2,357
Acquired loans		—		219		—		167
Total	$	8,507	$	36,064	$	5,985	$	35,681

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
	March 31, 2016						December 31, 2015
	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	$	11,843	$	500,245	$	—	$	8,619	$	494,278	$	—
Non-residential real estate other		9,363		1,130,045		—		8,608		1,102,152		—
Residential real estate permanent mortgage		8,337		321,481		—		7,543		325,058		—
Residential real estate all other		12,453		687,420		—		10,803		665,886		—
Commercial and financial:
Non-consumer non-real estate		33,780		945,147		—		22,983		961,779		—
Consumer non-real estate		2,596		261,851		—		2,416		266,453		—
Other loans		2,216		160,655		—		2,323		160,293		—
Acquired loans		—		172,940		14,740		—		177,871		14,983
Total	$	80,588	$	4,179,784	$	14,740	$	63,295	$	4,153,770	$	14,983

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:

	Three Months Ended March 31,
	2016		2015
	(Dollars in thousands)
Other real estate owned	$	344	$	260
Repossessed assets		404		220
Total	$	748	$	480