Note 3.

Loans

Loan Portfolio

The Company’s loan portfolio is grouped into three segments (commercial loans, consumer real estate loans, and consumer and other loans) and each segment is divided further into various classes. Loans, net of unearned income, consisted of the following at June 30, 2013, and December 31, 2012:


	June 30, 2013					December 31, 2012
(Amounts in thousands)	Amount		Percent			Amount		Percent

Covered loans	$	184,076		10.88	%	$	207,106		12.01	%
Non-covered loans
Commercial loans
Construction, development, and other land		52,198		3.09	%		57,434		3.33	%
Commercial and industrial		92,448		5.47	%		88,738		5.15	%
Multi-family residential		59,536		3.52	%		65,694		3.81	%
Single family non-owner occupied		134,207		7.93	%		135,912		7.88	%
Non-farm, non-residential		455,224		26.91	%		448,810		26.02	%
Agricultural		2,393		0.14	%		1,709		0.10	%
Farmland		34,354		2.03	%		34,570		2.00	%

Total commercial loans		830,360		49.09	%		832,867		48.29	%
Consumer real estate loans
Home equity lines		109,820		6.49	%		111,081		6.44	%
Single family owner occupied		473,212		27.98	%		473,547		27.46	%
Owner occupied construction		21,276		1.26	%		16,223		0.94	%

Total consumer real estate loans		604,308		35.73	%		600,851		34.84	%
Consumer and other loans
Consumer loans		69,002		4.08	%		78,163		4.53	%
Other		3,752		0.22	%		5,666		0.33	%

Total consumer and other loans		72,754		4.30	%		83,829		4.86	%

Total non-covered loans		1,507,422		89.12	%		1,517,547		87.99	%

Total loans held for investment, net of unearned income	$	1,691,498		100.00	%	$	1,724,653		100.00	%


Loans held for sale	$	4,621				$	6,672

Covered loans held for investment consisted of the following at June 30, 2013, and December 31, 2012:


(Amounts in thousands)	June 30, 2013		December 31, 2012
Covered loans
Commercial loans
Construction, development, and other land	$	23,067	$	26,595
Commercial and industrial		4,412		6,948
Multi-family residential		2,434		2,611
Single family non-owner occupied		9,750		11,428
Non-farm, non-residential		41,200		48,565
Agricultural		31		144
Farmland		1,234		1,091

Total commercial loans		82,128		97,382
Consumer real estate loans
Home equity lines		77,132		81,445
Single family owner occupied		20,467		22,961
Owner occupied construction		1,638		1,644

Total consumer real estate loans		99,237		106,050
Consumer and other loans
Consumer loans		2,711		3,674

Total covered loans	$	184,076	$	207,106

See Note 12, “Litigation, Commitments and Contingencies,” for information concerning the Company’s off-balance sheet credit risk related to lending activities.

Acquired Impaired Loans

When the fair values of acquired loans are established, certain loans are identified as impaired. The Company has estimated the cash flows to be collected on the acquired impaired loans and discounted those cash flows at a market rate of interest. The outstanding principal balance of acquired impaired loans was $155.04 million at June 30, 2013, $198.34 million at December 31, 2012, and $215.16 million at June 30, 2012. The following tables present the carrying balance of acquired impaired loans during the periods indicated:


	Six Months Ended June 30, 2013
	Peoples		Waccamaw		Other		Total
(Amounts in thousands)
Balance, January 1	$	26,907	$	110,115	$	2,340	$	139,362
Balance, June 30		17,484		90,105		2,088		109,677


	Six Months Ended June 30, 2012
	Peoples		Waccamaw		Other		Total
(Amounts in thousands)
Balance, January 1	$	—	$	—	$	2,886	$	2,886
Balance, June 30		33,454		112,498		2,293		148,245

The following tables present changes in the accretable yield on acquired impaired loans during the periods indicated:


	Six Months Ended June 30, 2013
	Peoples			Waccamaw			Other			Total
(Amounts in thousands)
Balance, January 1, 2013	$	2,342		$	21,886		$	15		$	24,243
Additions		148			178			—			326
Accretion		(846	)		(2,900	)		(99	)		(3,845	)
Transfers to accretable discount (exit events), net		4,695			(9,104	)		92			(4,317	)
Disposals		(1,203	)		(1,581	)		—			(2,784	)

Balance, June 30, 2013	$	5,136		$	8,479		$	8		$	13,623


	Six Months Ended June 30, 2012
	Peoples			Waccamaw			Other			Total
(Amounts in thousands)
Balance, January 1, 2012	$	—		$	—		$	919		$	919
Additions		3,400			26,481			—			29,881
Accretion		(139	)		(513	)		(1,146	)		(1,798	)
Transfers to accretable discount, net		—			—			92			92
Disposals		—			—			161			161

Balance, June 30, 2012	$	3,261		$	25,968		$	26		$	29,255