(4)	LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

	March 31, 2015					December 31, 2014					March 31, 2014
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Commercial and financial:
Commercial and industrial	$	747,470		19.38	%	$	745,106		19.30	%	$	676,084		19.09	%
Oil & gas production and equipment		102,342		2.65			104,940		2.72			99,382		2.80
Agriculture		122,186		3.17			132,830		3.44			109,570		3.09
State and political subdivisions:
Taxable		18,055		0.47			20,431		0.53			9,824		0.28
Tax-exempt		25,374		0.66			20,952		0.54			11,219		0.32
Real estate:
Construction		361,976		9.38			356,621		9.24			299,238		8.45
Farmland		145,494		3.77			149,507		3.87			141,059		3.98
One to four family residences		783,810		20.32			775,795		20.09			723,358		20.42
Multifamily residential properties		66,851		1.73			66,766		1.73			60,785		1.72
Commercial		1,192,581		30.91			1,191,477		30.86			1,134,384		32.02
Consumer		259,644		6.73			267,179		6.92			251,651		7.10
Other (not classified above)		31,959		0.83			29,227		0.76			25,716		0.73
Total loans	$	3,857,742		100.00	%	$	3,860,831		100.00	%	$	3,542,270		100.00	%
Loans held for sale (included above)	$	11,103				$	9,433				$	5,231

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:

	March 31,			December 31,			March 31,
	2015			2014			2014
	(Dollars in thousands)
Past due 90 days or more and still accruing	$	1,498		$	1,135		$	910
Nonaccrual		16,562			16,410			17,753
Restructured		16,131			16,515			17,468
Total nonperforming and restructured loans		34,191			34,060			36,131
Other real estate owned and repossessed assets		6,418			8,079			7,590
Total nonperforming and restructured assets	$	40,609		$	42,139		$	43,721
Nonperforming and restructured loans to total loans		0.89	%		0.88	%		1.02	%
Nonperforming and restructured assets to total assets		0.62	%		0.64	%		0.69	%

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 $310,000 for the three months ended March 31, 2015 and approximately $227,000 for the three months ended March 31, 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.

	March 31, 2015		March 31, 2014
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied	$	408	$	448
Non-residential real estate other		5,113		5,779
Residential real estate permanent mortgage		641		689
Residential real estate all other		1,730		958
Commercial and financial:
Non-consumer non-real estate		2,215		1,287
Consumer non-real estate		177		165
Other loans		1,752		1,198
Acquired loans		4,526		7,229
Total	$	16,562	$	17,753

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, 2015
Real estate:
Non-residential real estate owner occupied	$	417	$	—	$	258	$	675	$	486,183	$	486,858	$	60
Non-residential real estate other		4,597		—		825		5,422		951,760		957,182		—
Residential real estate permanent mortgage		1,922		403		337		2,662		310,115		312,777		49
Residential real estate all other		1,732		477		1,320		3,529		636,092		639,621		464
Commercial and financial:
Non-consumer non-real estate		3,413		239		1,127		4,779		958,831		963,610		250
Consumer non-real estate		1,678		668		272		2,618		239,584		242,202		201
Other loans		1,373		452		1,075		2,900		162,228		165,128		352
Acquired loans		2,025		194		1,400		3,619		86,745		90,364		122
Total	$	17,157	$	2,433	$	6,614	$	26,204	$	3,831,538	$	3,857,742	$	1,498
As of March 31, 2014
Real estate:
Non-residential real estate owner occupied	$	518	$	—	$	298	$	816	$	457,978	$	458,794	$	96
Non-residential real estate other		4,978		—		935		5,913		873,592		879,505		—
Residential real estate permanent mortgage		1,391		476		458		2,325		270,879		273,204		76
Residential real estate all other		1,101		173		543		1,817		565,930		567,747		86
Commercial and financial:
Non-consumer non-real estate		2,599		150		929		3,678		824,361		828,039		18
Consumer non-real estate		1,561		526		260		2,347		223,615		225,962		218
Other loans		1,569		—		1,071		2,640		145,571		148,211		—
Acquired loans		2,916		712		3,874		7,502		153,306		160,808		416
Total	$	16,633	$	2,037	$	8,368	$	27,038	$	3,515,232	$	3,542,270	$	910

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 March 31, 2015
Real estate:
Non-residential real estate owner occupied	$	574	$	499	$	18	$	516
Non-residential real estate other		22,834		20,784		1,338		21,133
Residential real estate permanent mortgage		1,034		803		60		916
Residential real estate all other		2,503		2,279		313		2,393
Commercial and financial:
Non-consumer non-real estate		2,797		2,465		614		2,129
Consumer non-real estate		566		553		107		582
Other loans		2,204		2,105		49		2,322
Acquired loans		8,488		5,475		—		5,763
Total	$	41,000	$	34,963	$	2,499	$	35,754

As of March 31, 2014
Real estate:
Non-residential real estate owner occupied	$	688	$	601	$	29	$	642
Non-residential real estate other		24,355		22,680		1,734		22,915
Residential real estate permanent mortgage		1,068		836		88		918
Residential real estate all other		1,318		1,139		218		1,335
Commercial and financial:
Non-consumer non-real estate		1,824		1,491		427		1,449
Consumer non-real estate		548		527		134		572
Other loans		1,215		1,198		207		1,278
Acquired loans		20,179		13,361		189		9,744
Total	$	51,195	$	41,833	$	3,026	$	38,853

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 March 31, 2015
Real estate:
Non-residential real estate owner occupied	$	403,255	$	77,545	$	5,590	$	468	$	—	$	486,858
Non-residential real estate other		794,097		127,716		30,255		5,114		—		957,182
Residential real estate permanent mortgage		276,186		29,103		6,743		745		—		312,777
Residential real estate all other		526,322		100,008		11,216		2,075		—		639,621
Commercial and financial:
Non-consumer non-real estate		811,529		125,609		24,107		2,365		—		963,610
Consumer non-real estate		227,722		12,321		1,716		443		—		242,202
Other loans		158,895		5,116		779		338		—		165,128
Acquired loans		42,540		33,670		9,358		4,503		293		90,364
Total	$	3,240,546	$	511,088	$	89,764	$	16,051	$	293	$	3,857,742

As of March 31, 2014
Real estate:
Non-residential real estate owner occupied	$	381,290	$	70,949	$	6,052	$	503	$	—	$	458,794
Non-residential real estate other		724,181		129,390		20,155		5,779		—		879,505
Residential real estate permanent mortgage		240,653		25,074		6,610		867		—		273,204
Residential real estate all other		474,152		86,033		6,495		1,067		—		567,747
Commercial and financial:
Non-consumer non-real estate		673,757		147,625		5,350		1,307		—		828,039
Consumer non-real estate		212,492		11,388		1,655		427		—		225,962
Other loans		144,870		2,375		736		230		—		148,211
Acquired loans		92,581		48,073		12,091		7,917		146		160,808
Total	$	2,943,976	$	520,907	$	59,144	$	18,097	$	146	$	3,542,270

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 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

	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, 2014
Real estate:
Non-residential real estate owner occupied	$	4,827	$	(4	)	$	31	$	27		$	158		$	5,012
Non-residential real estate other		11,026		—			3		3			(344	)		10,685
Residential real estate permanent mortgage		2,825		(130	)		10		(120	)		532			3,237
Residential real estate all other		6,708		(49	)		4		(45	)		(178	)		6,485
Commercial and financial:
Non-consumer non-real estate		8,977		(70	)		14		(56	)		782			9,703
Consumer non-real estate		2,556		(140	)		62		(78	)		95			2,573
Other loans		1,991		(64	)		17		(47	)		128			2,072
Acquired loans		124		(17	)		5		(12	)		45			157
Total	$	39,034	$	(474	)	$	146	$	(328	)	$	1,218		$	39,924

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, 2015				March 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.	$	227	$	4,234	$	361	$	4,651
Non-residential real estate other		1,885		8,013		1,929		8,756
Residential real estate permanent mortgage		396		2,588		588		2,649
Residential real estate all other		1,067		5,511		733		5,752
Commercial and financial:
Non-consumer non-real estate		4,935		8,133		1,133		8,570
Consumer non-real estate		346		1,981		389		2,184
Other loans		42		2,199		242		1,830
Acquired loans		—		—		—		157
Total	$	8,898	$	32,659	$	5,375	$	34,549

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, 2015						March 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	$	6,058	$	480,800	$	—	$	6,555	$	452,239	$	—
Non-residential real estate other		35,369		921,813		—		25,934		853,571		—
Residential real estate permanent mortgage		7,488		305,289		—		7,477		265,727		—
Residential real estate all other		13,291		626,330		—		7,562		560,185		—
Commercial and financial:
Non-consumer non-real estate		26,472		937,138		—		6,657		821,382		—
Consumer non-real estate		2,161		240,041		—		2,082		223,880		—
Other loans		139		164,989		—		308		147,903		—
Acquired loans		—		76,210		14,154		—		140,654		20,154
Total	$	90,978	$	3,752,610	$	14,154	$	56,575	$	3,465,541	$	20,154

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,
	2015		2014
	(Dollars in thousands)
Other real estate owned	$	260	$	66
Repossessed assets		220		327
Total	$	480	$	393