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:


	March 31, 2015					December 31, 2014
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	39,628		2.37	%	$	41,271		2.44	%
Commercial and industrial		78,482		4.70	%		83,099		4.92	%
Multi-family residential		97,295		5.82	%		97,480		5.77	%
Single family non-owner occupied		137,436		8.22	%		135,171		8.00	%
Non-farm, non-residential		463,035		27.71	%		473,906		28.05	%
Agricultural		1,671		0.10	%		1,599		0.09	%
Farmland		28,644		1.71	%		29,517		1.75	%

Total commercial loans		846,191		50.63	%		862,043		51.02	%
Consumer real estate loans
Home equity lines		109,158		6.53	%		110,957		6.57	%
Single family owner occupied		491,317		29.40	%		485,475		28.74	%
Owner occupied construction		35,324		2.12	%		32,799		1.94	%

Total consumer real estate loans		635,799		38.05	%		629,231		37.25	%
Consumer and other loans
Consumer loans		69,084		4.13	%		69,347		4.10	%
Other		7,236		0.44	%		6,555		0.39	%

Total consumer and other loans		76,320		4.57	%		75,902		4.49	%

Total non-covered loans		1,558,310		93.25	%		1,567,176		92.76	%
Total covered loans		112,724		6.75	%		122,240		7.24	%

Total loans held for investment, net of unearned income	$	1,671,034		100.00	%	$	1,689,416		100.00	%


Loans held for sale	$	1,174				$	1,792

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


	March 31,		December 31,
(Amounts in thousands)	2015		2014
Covered loans
Commercial loans
Construction, development, and other land	$	10,410	$	13,100
Commercial and industrial		2,371		2,662
Multi-family residential		678		1,584
Single family non-owner occupied		4,846		5,918
Non-farm, non-residential		24,672		25,317
Agricultural		42		43
Farmland		697		716

Total commercial loans		43,716		49,340
Consumer real estate loans
Home equity lines		57,415		60,391
Single family owner occupied		10,994		11,968
Owner occupied construction		512		453

Total consumer real estate loans		68,921		72,812
Consumer and other loans
Consumer loans		87		88

Total covered loans	$	112,724	$	122,240

Purchased Credit Impaired Loans

Certain purchased loans are identified as impaired when fair values are established at acquisition. 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, Waccamaw serviced home equity lines, Waccamaw residential, Peoples Bank of Virginia (“Peoples”) commercial, and Peoples residential. The Company closed the Waccamaw consumer loan pool during the first quarter of 2015 due to an insignificant remaining balance. 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:


	Peoples		Waccamaw		Other		Total
(Amounts in thousands)
Carrying balance, January 1, 2014	$	9,196	$	70,584	$	1,931	$	81,711
Carrying balance, December 31, 2014		7,090		53,835		1,358		62,283
Unpaid principal balance, December 31, 2014		13,669		86,641		1,401		101,711

Carrying balance, January 1, 2015	$	7,090	$	53,835	$	1,358	$	62,283
Carrying balance, March 31, 2015		6,954		51,649		1,332		59,935
Unpaid principal balance, March 31, 2015		12,353		83,559		1,375		97,287

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


	Peoples			Waccamaw			Other			Total
(Amounts in thousands)
Three months ended March 31, 2014
Balance, January 1, 2014	$	5,294		$	10,338		$	8		$	15,640
Additions		1			7			—			8
Accretion		(563	)		(1,563	)		(11	)		(2,137	)
Reclassifications from nonaccretable difference		337			8,977			11			9,325
Removal events		(112	)		(167	)		—			(279	)

Ending balance	$	4,957		$	17,592		$	8		$	22,557

Three months ended March 31, 2015
Beginning balance	$	4,745		$	19,048		$	—		$	23,793
Additions		—			2			—			2
Accretion		(630	)		(1,602	)		—			(2,232	)
Reclassifications from nonaccretable difference		1,106			2,445			—			3,551
Removal events		(735	)		(439	)		—			(1,174	)

Ending balance	$	4,486		$	19,454		$	—		$	23,940

Deferred loan fees totaled $3.50 million as of March 31, 2015, and $3.39 million as of December 31, 2014. For information concerning unfunded loan commitments, see Note 13, “Litigation, Commitments and Contingencies,” to the Condensed Consolidated Financial Statements of this report.