Note 3. Loans

Loan Portfolio

The Company’s loans held for investment are grouped into three segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Covered loans are defined as loans acquired in FDIC-assisted transactions that are covered by loss share agreements. The following table presents loans, net of unearned income and disaggregated by class, as of the periods indicated:


	September 30, 2014					December 31, 2013
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	42,775		2.43	%	$	35,255		2.06	%
Commercial and industrial		88,709		5.03	%		95,455		5.58	%
Multi-family residential		99,812		5.66	%		70,197		4.10	%
Single family non-owner occupied		143,904		8.16	%		135,559		7.92	%
Non-farm, non-residential		491,933		27.91	%		475,911		27.82	%
Agricultural		2,149		0.12	%		2,324		0.14	%
Farmland		31,938		1.81	%		32,614		1.91	%

Total commercial loans		901,220		51.12	%		847,315		49.53	%
Consumer real estate loans
Home equity lines		112,863		6.40	%		111,770		6.53	%
Single family owner occupied		498,523		28.28	%		496,012		28.99	%
Owner occupied construction		45,015		2.56	%		28,703		1.68	%

Total consumer real estate loans		656,401		37.24	%		636,485		37.20	%
Consumer and other loans
Consumer loans		71,252		4.04	%		71,313		4.17	%
Other		7,308		0.42	%		3,926		0.23	%

Total consumer and other loans		78,560		4.46	%		75,239		4.40	%

Total non-covered loans		1,636,181		92.82	%		1,559,039		91.13	%
Total covered loans		126,611		7.18	%		151,682		8.87	%

Total loans held for investment, net of unearned income	$	1,762,792		100.00	%	$	1,710,721		100.00	%

Loans held for sale	$	1,150				$	883

The following table presents the components of the Company’s covered loan portfolio, disaggregated by class, as of the dates indicated:


	September 30,		December 31,
(Amounts in thousands)	2014		2013
Covered loans
Commercial loans
Construction, development, and other land	$	13,184	$	15,865
Commercial and industrial		2,646		3,325
Multi-family residential		1,612		1,933
Single family non-owner occupied		6,212		7,449
Non-farm, non-residential		26,238		34,646
Agricultural		151		164
Farmland		729		873

Total commercial loans		50,772		64,255
Consumer real estate loans
Home equity lines		62,772		69,206
Single family owner occupied		12,504		16,919
Owner occupied construction		466		1,184

Total consumer real estate loans		75,742		87,309
Consumer and other loans
Consumer loans		97		118

Total covered loans	$	126,611	$	151,682

Purchased Credit Impaired Loans

When the fair values of purchased loans are established at acquisition, certain loans are identified as impaired. These purchased credit impaired (“PCI”) loans are aggregated into loan pools that have common risk characteristics. The Company’s loan pools consist of Waccamaw commercial, Waccamaw lines of credit, Peoples Bank of Virginia (“Peoples”) commercial, Waccamaw serviced home equity lines, Waccamaw residential, Peoples residential, and Waccamaw consumer. The Company estimates cash flows to be collected on PCI loans and discounts those cash flows at a market rate of interest.

The following table presents the carrying and contractual unpaid principal balance of PCI loans, by acquisition, as of the dates indicated:


(Amounts in thousands)	Peoples		Waccamaw		Other		Total
Carrying balance, January 1, 2013	$	26,907	$	112,093	$	2,340	$	141,340
Carrying balance, December 31, 2013		9,196		70,584		1,931		81,711
Unpaid principal balance, December 31, 2013		17,431		105,677		5,390		128,498
Carrying balance, January 1, 2014	$	9,196	$	70,584	$	1,931	$	81,711
Carrying balance, September 30, 2014		7,432		56,580		1,393		65,405
Unpaid principal balance, September 30, 2014		14,142		89,385		4,824		108,351

The following table presents the activity in the accretable yield related to PCI loans, by acquisition, in the periods indicated:


(Amounts in thousands)	Peoples			Waccamaw			Other			Total
Nine months ended September 30, 2013
Beginning balance	$	2,342		$	21,886		$	15		$	24,243
Additions		148			189			—			337
Accretion		(1,315	)		(4,558	)		(108	)		(5,981	)
Reclassifications from (to) nonaccretable difference		4,276			(6,477	)		101			(2,100	)
Removal events		(1,417	)		(2,127	)		—			(3,544	)

Ending balance	$	4,034		$	8,913		$	8		$	12,955

Nine months ended September 30, 2014
Beginning balance	$	5,294		$	10,338		$	8		$	15,640
Additions		98			24			—			122
Accretion		(1,601	)		(4,540	)		(29	)		(6,170	)
Reclassifications from nonaccretable difference		1,205			13,968			29			15,202
Removal events		(521	)		(1,445	)		—			(1,966	)

Ending balance	$	4,475		$	18,345		$	8		$	22,828

For information concerning off-balance sheet financing, see Note 13, “Litigation, Commitments and Contingencies,” to the Condensed Consolidated Financial Statements of this report.