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:


	June 30, 2015					December 31, 2014
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	39,854		2.39	%	$	41,271		2.44	%
Commercial and industrial		82,121		4.93	%		83,099		4.92	%
Multi-family residential		96,235		5.77	%		97,480		5.77	%
Single family non-owner occupied		144,639		8.67	%		135,171		8.00	%
Non-farm, non-residential		458,325		27.49	%		473,906		28.05	%
Agricultural		1,863		0.11	%		1,599		0.09	%
Farmland		27,945		1.68	%		29,517		1.75	%

Total commercial loans		850,982		51.04	%		862,043		51.02	%
Consumer real estate loans
Home equity lines		107,961		6.48	%		110,957		6.57	%
Single family owner occupied		488,712		29.31	%		485,475		28.74	%
Owner occupied construction		37,434		2.24	%		32,799		1.94	%

Total consumer real estate loans		634,107		38.03	%		629,231		37.25	%
Consumer and other loans
Consumer loans		72,094		4.32	%		69,347		4.10	%
Other		7,472		0.45	%		6,555		0.39	%

Total consumer and other loans		79,566		4.77	%		75,902		4.49	%

Total non-covered loans		1,564,655		93.84	%		1,567,176		92.76	%
Total covered loans		102,634		6.16	%		122,240		7.24	%

Total loans held for investment, net of unearned income	$	1,667,289		100.00	%	$	1,689,416		100.00	%


Loans held for sale	$	913				$	1,792

Deferred loan fees totaled $3.68 million as of June 30, 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.

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


(Amounts in thousands)	June 30, 2015		December 31, 2014
Covered loans
Commercial loans
Construction, development, and other land	$	9,000	$	13,100
Commercial and industrial		1,449		2,662
Multi-family residential		848		1,584
Single family non-owner occupied		4,138		5,918
Non-farm, non-residential		21,404		25,317
Agricultural		35		43
Farmland		671		716

Total commercial loans		37,545		49,340
Consumer real estate loans
Home equity lines		54,565		60,391
Single family owner occupied		10,253		11,968
Owner occupied construction		186		453

Total consumer real estate loans		65,004		72,812
Consumer and other loans
Consumer loans		85		88

Total covered loans	$	102,634	$	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:


	June 30, 2015				December 31, 2014
(Amounts in thousands)	Carrying Balance		Unpaid Principal Balance		Carrying Balance		Unpaid Principal Balance
PCI Loans, by acquisition
Peoples Bank of Virginia	$	6,048	$	11,991	$	7,090	$	13,669
Waccamaw Bank		47,710		75,560		53,835		86,641
Other acquired		1,307		1,350		1,358		1,401

Total PCI Loans	$	55,065	$	88,901	$	62,283	$	101,711

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


	Six Months Ended June 30, 2015
	Peoples			Waccamaw			Other		Total
(Amounts in thousands)
Beginning balance	$	4,745		$	19,048		$	—	$	23,793
Additions		—			2			—		2
Accretion		(1,169	)		(2,860	)		—		(4,029	)
Reclassifications from nonaccretable difference		1,106			2,445			—		3,551
Removal events		(735	)		(807	)		—		(1,542	)

Ending balance	$	3,947		$	17,828		$	—	$	21,775


	Six Months Ended June 30, 2014
	Peoples			Waccamaw			Other			Total
(Amounts in thousands)
Beginning balance	$	5,294		$	10,338		$	8		$	15,640
Additions		70			20			—			90
Accretion		(1,096	)		(3,019	)		(23	)		(4,138	)
Reclassifications from nonaccretable difference		513			11,603			23			12,139
Removal events		(467	)		(1,046	)		—			(1,513	)

Ending balance	$	4,314		$	17,896		$	8		$	22,218