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Loans
 9 Months Ended
Sep. 30, 2013
Loans Receivable, Net [Abstract]  
Loans
Loans

The following summarizes the Company’s major classifications for loans (in thousands):

 
September 30, 2013
 
December 31, 2012
Residential real estate
$
1,188,841

 
$
1,031,435

Home equity – junior liens
140,887

 
143,110

Commercial and industrial
151,185

 
108,739

Commercial real estate
1,022,278

 
821,970

Consumer
50,757

 
36,564

DDA overdrafts
4,508

 
4,551

Gross loans
2,558,456

 
2,146,369

Allowance for loan losses
(20,606
)
 
(18,809
)
Net loans
$
2,537,850

 
$
2,127,560




Construction loans of $14.8 million and $15.4 million are included within residential real estate loans at September 30, 2013 and December 31, 2012, respectively.  Construction loans of $17.4 million and $15.4 million are included within commercial real estate loans at September 30, 2013 and December 31, 2012, respectively.  The Company’s commercial and residential real estate construction loans are primarily secured by real estate within the Company’s principal markets.  These loans were originated under the Company’s loan policy, which is focused on the risk characteristics of the loan portfolio, including construction loans.  Adequate consideration has been given to these loans in establishing the Company’s allowance for loan losses.

The information in the following tables related to the Community acquisition are estimated amounts, based on management's assumptions. Once the purchase price allocation is finalized, actual results could be significantly different than those assumed below.

The following table details the loans acquired in conjunction with the Virginia Savings and Community acquisitions (in thousands):
 
Virginia
 
 
 
 
 
Savings
 
Community
 
Total
September 30, 2013
 
 
 
 
 
Outstanding loan balance
$
52,640

 
$
288,117

 
$
340,757

 
 
 
 
 
 
Credit-impaired loans:
 
 
 
 
 
Carrying value
4,248

 
24,958

 
29,206

Contractual principal and interest
5,253

 
40,896

 
46,149

 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
Outstanding loan balance
$
65,219

 
$
—

 
$
65,219

 
 
 
 
 
 
Credit-impaired loans:
 
 
 
 
 
Carrying value
7,018

 
—

 
7,018

Contractual principal and interest
10,759

 
—

 
10,759



Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2013 is as follows (in thousands):

 
Virginia Savings
 
Community
 
Total
 
 
 
Carrying
 
 
 
Carrying
 
 
 
Carrying
 
Accretable
 
Amount
 
Accretable
 
Amount
 
Accretable
 
Amount
 
Yield
 
of Loans
 
Yield
 
of Loans
 
Yield
 
of Loans
Balance at the beginning of the period
$
1,823

 
$
7,018

 
$
—

 
$
—

 
$
1,823

 
$
7,018

Additions
—

 
—

 
5,587

 
31,790

 
5,587

 
31,790

Accretion
(844
)
 
844

 
(1,665
)
 
1,665

 
(2,509
)
 
2,509

Net reclassifications to accretable yield from
 
 
 
 
 
 
 
 
 
 
 
   non-accretable yield
889

 
—

 
—

 
—

 
889

 
—

Payments received, net
—

 
(3,585
)
 
—

 
(8,497
)
 
—

 
(12,082
)
Disposals
(604
)
 
(29
)
 
(344
)
 
—

 
(948
)
 
(29
)
Balance at the end of period
$
1,264

 
$
4,248

 
$
3,578

 
$
24,958

 
$
4,842

 
$
29,206



Increases in expected cash flow subsequent to the acquisition are recognized first as a reduction of any previous impairment, then prospectively through adjustment of the yield on the loans or pools over its remaining life, while decreases in expected cash flows are recognized as impairment through a provision for loan loss and an increase in the allowance for purchased credit-impaired loans.