Note

. Loans

The Company groups loans held for investment into

three

segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Covered loans are those loans acquired in Federal Deposit Insurance Corporation (“FDIC”) assisted transactions that are covered by loss share agreements. Customer overdrafts reclassified as loans totaled

$1.83

million as of

September 30, 2018,

and

$1.71

million as of

December 31, 2017.

Deferred loan fees, net of loan costs, totaled

$4.64

million as of

September 30, 2018,

and

$4.44

million as of

December 31, 2017.

For information about off-balance sheet financing, see Note

14,

“Litigation, Commitments, and Contingencies,” to the Condensed Consolidated Financial Statements of this report.

The following table presents loans, net of unearned income, with the non-covered portfolio by loan class, as of the dates indicated:

	September 30, 2018					December 31, 2017
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	62,657		3.50	%	$	60,017		3.30	%
Commercial and industrial		105,603		5.90	%		92,188		5.07	%
Multi-family residential		112,710		6.29	%		125,202		6.89	%
Single family non-owner occupied		142,591		7.96	%		141,670		7.80	%
Non-farm, non-residential		606,800		33.88	%		616,633		33.93	%
Agricultural		9,016		0.50	%		7,035		0.39	%
Farmland		20,872		1.17	%		25,649		1.41	%
Total commercial loans		1,060,249		59.20	%		1,068,394		58.79	%
Consumer real estate loans
Home equity lines		96,819		5.41	%		103,205		5.68	%
Single family owner occupied		520,363		29.05	%		502,686		27.66	%
Owner occupied construction		17,889		1.00	%		39,178		2.16	%
Total consumer real estate loans		635,071		35.46	%		645,069		35.50	%
Consumer and other loans
Consumer loans		69,974		3.91	%		70,772		3.89	%
Other		5,132		0.29	%		5,001		0.28	%
Total consumer and other loans		75,106		4.20	%		75,773		4.17	%
Total non-covered loans		1,770,426		98.86	%		1,789,236		98.46	%
Total covered loans		20,483		1.14	%		27,948		1.54	%
Total loans held for investment, net of unearned income	$	1,790,909		100.00	%	$	1,817,184		100.00	%

The following table presents the covered loan portfolio, by loan class, as of the dates indicated:

	September 30, 2018		December 31, 2017
(Amounts in thousands)
Covered loans
Commercial loans
Construction, development, and other land	$	35	$	39
Single family non-owner occupied		245		284
Non-farm, non-residential		7		9
Total commercial loans		287		332
Consumer real estate loans
Home equity lines		16,804		23,720
Single family owner occupied		3,392		3,896
Total consumer real estate loans		20,196		27,616
Total covered loans	$	20,483	$	27,948

The Company identifies certain purchased loans as impaired when fair values are established at acquisition and groups those purchased credit impaired (“PCI”) loans into loan pools with common risk characteristics. 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 recorded investment and contractual unpaid principal balance of PCI loans, by acquisition, as of the dates indicated:

	September 30, 2018				December 31, 2017
(Amounts in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance
PCI Loans, by acquisition
Peoples	$	5,420	$	7,546	$	5,278	$	8,111
Waccamaw		7,354		22,930		12,176		31,335
Other acquired		899		925		986		1,012
Total PCI Loans	$	13,673	$	31,401	$	18,440	$	40,458

The following table presents the changes in the accretable yield on PCI loans, by acquisition, during the periods indicated:

	Peoples			Waccamaw			Total
(Amounts in thousands)
Balance January 1, 2017	$	4,392		$	21,834		$	26,226
Accretion		(969	)		(4,690	)		(5,659	)
Reclassifications from nonaccretable difference (1)		782			2,525			3,307
Other changes, net		(375	)		(311	)		(686	)
Balance September 30, 2017	$	3,830		$	19,358		$	23,188

Balance January 1, 2018	$	3,388		$	19,465		$	22,853
Accretion		(986	)		(4,157	)		(5,143	)
Reclassifications (to) from nonaccretable difference (1)		(5	)		1,416			1,411
Other changes, net		354			(302	)		52
Balance September 30, 2018	$	2,751		$	16,422		$	19,173

____________________________________________________________________________________________________________________________________________________________

(

) Represents changes attributable to expected loss assumptions