(4)	LOANS AND ALLOWANCE FOR LOAN LOSSES

The following is a schedule of loans outstanding by category:

	June 30, 2015					December 31, 2014
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Commercial and financial:
Commercial and industrial	$	741,595		19.22	%	$	745,106		19.35	%
Oil & gas production and equipment		88,488		2.29			104,940		2.72
Agriculture		117,729		3.05			132,830		3.45
State and political subdivisions:
Taxable		17,884		0.46			20,431		0.53
Tax-exempt		27,687		0.72			20,952		0.54
Real estate:
Construction		363,067		9.41			356,621		9.26
Farmland		148,500		3.85			149,507		3.88
One to four family residences		785,170		20.35			766,362		19.90
Multifamily residential properties		64,366		1.67			66,766		1.73
Commercial		1,200,331		31.11			1,191,477		30.94
Consumer		270,172		7.00			267,179		6.94
Other (not classified above)		33,343		0.87			29,227		0.76
Total loans	$	3,858,332		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:

	June 30,		December 31,
	2015		2014
	(Dollars in thousands)
Past due 90 days or more and still accruing	$	1,311	$	1,135
Nonaccrual		32,177		16,410
Restructured		15,702		16,515
Total nonperforming and restructured loans		49,190		34,060
Other real estate owned and repossessed assets		7,521		8,079
Total nonperforming and restructured assets	$	56,711	$	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 $922,000 for the six months ended June 30, 2015 and approximately $481,000 for the six months ended June 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.

	June 30, 2015		December 31, 2014
	(Dollars in thousands)
Real estate:
Non-residential real estate owner occupied	$	192	$	296
Non-residential real estate other		4,937		5,126
Residential real estate permanent mortgage		777		681
Residential real estate all other		1,479		1,796
Commercial and financial:
Non-consumer non-real estate		18,522		1,556
Consumer non-real estate		220		250
Other loans		1,629		1,659
Acquired loans		4,421		5,046
Total	$	32,177	$	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 June 30, 2015
Real estate:
Non-residential real estate owner occupied	$	235	$	—	$	159	$	394	$	492,117	$	492,511	$	159
Non-residential real estate other		914		—		825		1,739		961,559		963,298		—
Residential real estate permanent mortgage		865		659		487		2,011		320,538		322,549		219
Residential real estate all other		2,954		233		1,122		4,309		638,649		642,958		326
Commercial and financial:
Non-consumer non-real estate		16,192		1,671		1,300		19,163		919,622		938,785		357
Consumer non-real estate		1,403		693		317		2,413		252,336		254,749		213
Other loans		891		567		485		1,943		155,372		157,315		—
Acquired loans		525		676		1,472		2,673		83,494		86,167		37
Total	$	23,979	$	4,499	$	6,167	$	34,645	$	3,823,687	$	3,858,332	$	1,311
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 June 30, 2015
Real estate:
Non-residential real estate owner occupied	$	467	$	386	$	14	$	393
Non-residential real estate other		22,354		20,184		1,316		20,553
Residential real estate permanent mortgage		1,324		1,107		85		941
Residential real estate all other		2,122		1,889		202		2,058
Commercial and financial:
Non-consumer non-real estate		19,328		18,879		4,503		6,740
Consumer non-real estate		612		597		119		536
Other loans		2,056		1,628		80		1,699
Acquired loans		8,183		5,153		—		7,120
Total	$	56,446	$	49,823	$	6,319	$	40,040

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 June 30, 2015
Real estate:
Non-residential real estate owner occupied	$	407,818	$	78,987	$	5,455	$	251	$	—	$	492,511
Non-residential real estate other		809,293		119,551		29,517		4,937		—		963,298
Residential real estate permanent mortgage		283,951		30,254		7,295		1,049		—		322,549
Residential real estate all other		529,071		101,307		10,608		1,972		—		642,958
Commercial and financial:
Non-consumer non-real estate		773,811		133,243		13,080		18,651		—		938,785
Consumer non-real estate		239,719		12,349		2,154		524		3		254,749
Other loans		150,841		3,511		2,677		286		—		157,315
Acquired loans		41,592		30,532		9,277		4,476		290		86,167
Total	$	3,236,096	$	509,734	$	80,063	$	32,146	$	293	$	3,858,332

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 June 30, 2015
Real estate:
Non-residential real estate owner occupied	$	4,461	$	—		$	—	$	—		$	42		$	4,503
Non-residential real estate other		9,898		—			1		1			(19	)		9,880
Residential real estate permanent mortgage		2,984		(56	)		5		(51	)		177			3,110
Residential real estate all other		6,578		(7	)		4		(3	)		(90	)		6,485
Commercial and financial:
Non-consumer non-real estate		13,068		(16	)		7		(9	)		654			13,713
Consumer non-real estate		2,327		(103	)		40		(63	)		235			2,499
Other loans		2,241		(50	)		—		(50	)		240			2,431
Acquired loans		—		(34	)		2		(32	)		32			—
Total	$	41,557	$	(266	)	$	59	$	(207	)	$	1,271		$	42,621

Six Months Ended June 30, 2015
Real estate:
Non-residential real estate owner occupied	$	4,406	$	(1	)	$	1	$	—		$	97		$	4,503
Non-residential real estate other		9,616		—			1		1			263			9,880
Residential real estate permanent mortgage		2,948		(96	)		14		(82	)		244			3,110
Residential real estate all other		6,269		(75	)		9		(66	)		282			6,485
Commercial and financial:
Non-consumer non-real estate		12,771		(169	)		38		(131	)		1,073			13,713
Consumer non-real estate		2,404		(230	)		55		(175	)		270			2,499
Other loans		2,359		(263	)		9		(254	)		326			2,431
Acquired loans		116		(194	)		28		(166	)		50			—
Total	$	40,889	$	(1,028	)	$	155	$	(873	)	$	2,605		$	42,621

	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 June 30, 2014
Real estate:
Non-residential real estate owner occupied	$	5,012	$	(18	)	$	34	$	16		$	213		$	5,241
Non-residential real estate other		10,685		—			—		—			553			11,238
Residential real estate permanent mortgage		3,237		(32	)		31		(1	)		74			3,310
Residential real estate all other		6,485		(44	)		10		(34	)		364			6,815
Commercial and financial:
Non-consumer non-real estate		9,703		(61	)		16		(45	)		2,309			11,967
Consumer non-real estate		2,573		(190	)		46		(144	)		216			2,645
Other loans		2,072		(188	)		110		(78	)		(1	)		1,993
Acquired loans		157		(148	)		678		530			(599	)		88
Total	$	39,924	$	(681	)	$	925	$	244		$	3,129		$	43,297

Six Months Ended June 30, 2014
Real estate:
Non-residential real estate owner occupied	$	4,827	$	(22	)	$	65	$	43		$	371		$	5,241
Non-residential real estate other		11,026		—			3		3			209			11,238
Residential real estate permanent mortgage		2,825		(162	)		41		(121	)		606			3,310
Residential real estate all other		6,708		(93	)		14		(79	)		186			6,815
Commercial and financial:
Non-consumer non-real estate		8,977		(131	)		30		(101	)		3,091			11,967
Consumer non-real estate		2,556		(331	)		108		(223	)		312			2,645
Other loans		1,991		(251	)		127		(124	)		126			1,993
Acquired loans		124		(165	)		683		518			(554	)		88
Total	$	39,034	$	(1,155	)	$	1,071	$	(84	)	$	4,347		$	43,297

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
	June 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.	$	214	$	4,289	$	202	$	4,204
Non-residential real estate other		1,851		8,029		1,518		8,098
Residential real estate permanent mortgage		448		2,662		407		2,541
Residential real estate all other		935		5,550		743		5,526
Commercial and financial:
Non-consumer non-real estate		5,779		7,934		4,671		8,100
Consumer non-real estate		421		2,078		372		2,032
Other loans		56		2,375		214		2,145
Acquired loans		—		—		—		116
Total	$	9,704	$	32,917	$	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
	June 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	$	5,706	$	486,805	$	—	$	5,374	$	478,261	$	—
Non-residential real estate other		34,454		928,844		—		25,251		928,752		—
Residential real estate permanent mortgage		8,344		314,205		—		7,313		300,266		—
Residential real estate all other		12,580		630,378		—		8,319		628,769		—
Commercial and financial:
Non-consumer non-real estate		31,731		907,054		—		28,156		938,551		—
Consumer non-real estate		2,682		252,067		—		2,112		245,653		—
Other loans		229		157,086		—		233		152,751		—
Acquired loans		—		72,124		14,043		—		83,416		18,221
Total	$	95,726	$	3,748,563	$	14,043	$	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:

	Six Months Ended June 30,
	2015		2014
	(Dollars in thousands)
Other real estate owned	$	2,522	$	525
Repossessed assets		424		722
Total	$	2,946	$	1,247