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 FDIC assisted transactions that are covered by loss share agreements. Customer overdrafts reclassified as loans totaled

$2.20

million as of

December 31, 2019,

and

$1.79

million as of

December 31, 2018.

Deferred loan fees were

$4.60

million as of

December 31, 2019,

and

$4.60

million as of

December 31, 2018.

For information about off-balance sheet financing, see Note

20,

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

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

	December 31,
	2019					2018
(Amounts in thousands)	Amount		Percent			Amount		Percent
Non-covered loans held for investment
Commercial loans
Construction, development, and other land	$	48,659		2.30	%	$	63,508		3.58	%
Commercial and industrial		142,962		6.76	%		104,863		5.91	%
Multi-family residential		121,840		5.76	%		107,012		6.03	%
Single family non-owner occupied		163,181		7.72	%		140,097		7.89	%
Non-farm, non-residential		727,261		34.39	%		613,877		34.58	%
Agricultural		11,756		0.56	%		8,545		0.48	%
Farmland		23,155		1.10	%		18,905		1.07	%
Total commercial loans		1,238,814		58.59	%		1,056,807		59.54	%
Consumer real estate loans
Home equity lines		110,078		5.21	%		93,466		5.27	%
Single family owner occupied		620,697		29.35	%		510,963		28.78	%
Owner occupied construction		17,241		0.82	%		18,171		1.02	%
Total consumer real estate loans		748,016		35.38	%		622,600		35.07	%
Consumer and other loans
Consumer loans		110,027		5.20	%		71,552		4.03	%
Other		4,742		0.22	%		5,310		0.30	%
Total consumer and other loans		114,769		5.42	%		76,862		4.33	%
Total non-covered loans		2,101,599		99.39	%		1,756,269		98.94	%
Total covered loans		12,861		0.61	%		18,815		1.06	%
Total loans held for investment, net of unearned income	$	2,114,460		100.00	%	$	1,775,084		100.00	%

Loans held for Sale	$	263	$	-		$	-	$	-

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

	December 31,
(Amounts in thousands)	2019		2018
Covered loans
Commercial loans
Construction, development, and other land	$	28	$	35
Single family non-owner occupied		199		238
Non-farm, non-residential		3		6
Total commercial loans		230		279
Consumer real estate loans
Home equity lines		9,853		15,284
Single family owner occupied		2,778		3,252
Total consumer real estate loans		12,631		18,536
Total covered loans	$	12,861	$	18,815

The Company identifies certain purchased loans as impaired when fair values are established at acquisition and groups those 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:

	December 31,
	2019				2018
(Amounts in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance
PCI Loans, by acquisition
Peoples	$	5,071	$	6,431	$	5,330	$	7,272
Waccamaw		2,708		14,277		5,805		19,602
Highlands		53,116		64,096		-		-
Other acquired		352		378		868		894
Total PCI Loans	$	61,247	$	85,182	$	12,003	$	27,768

The Highlands acquisition added

$8.15

million in accretable yield and

not

included in the table below. The total fair value of the Highlands PCI loans is

$53.12

million. The gross contractual cash flows for the Highlands PCI loans is

$76.45

million. 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		(1,379	)		(5,664	)		(7,043	)
Reclassifications from nonaccretable difference (1)		825			3,378			4,203
Other changes, net		(450	)		(83	)		(533	)
Balance December 31, 2017	$	3,388		$	19,465		$	22,853

Balance January 1, 2018	$	3,388		$	19,465		$	22,853
Accretion		(1,263	)		(6,269	)		(7,532	)
Reclassifications from nonaccretable difference (1)		8			1,770			1,778
Other changes, net		457			(327	)		130
Balance December 31, 2018	$	2,590		$	14,639		$	17,229

Balance January 1, 2019	$	2,590		$	14,639		$	17,229
Accretion		(950	)		(3,317	)		(4,267	)
Reclassifications from nonaccretable difference (1)		17			1,440			1,457
Other changes, net		233			(188	)		45
Balance December 31, 2019	$	1,890		$	12,574		$	14,464

(

)

Respresents changes attributable to expected loss assumptions