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Loans
 3 Months Ended
Mar. 31, 2014
Loans Receivable, Net [Abstract]  
Loans
Loans

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

 
March 31, 2014
 
December 31, 2013
Residential real estate
$
1,214,785

 
$
1,207,150

Home equity – junior liens
141,929

 
143,390

Commercial and industrial
144,108

 
164,484

Commercial real estate
1,009,892

 
1,040,866

Consumer
42,320

 
46,402

DDA overdrafts
4,001

 
3,905

Gross loans
2,557,035

 
2,606,197

Allowance for loan losses
(21,044
)
 
(20,575
)
Net loans
$
2,535,991

 
$
2,585,622




Construction loans of $17.7 million and $17.3 million are included within residential real estate loans at March 31, 2014 and December 31, 2013, respectively.  Construction loans of $28.9 million and $24.0 million are included within commercial real estate loans at March 31, 2014 and December 31, 2013, 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 following table details the loans acquired in conjunction with the Virginia Savings Bancorp ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions (in thousands):
 
Virginia
 
 
 
 
 
Savings
 
Community
 
Total
March 31, 2014
 
 
 
 
 
Outstanding loan balance
$
45,493

 
$
258,882

 
$
304,375

 
 
 
 
 
 
Credit-impaired loans:
 
 
 
 
 
Carrying value
3,102

 
19,986

 
23,088

Contractual principal and interest
3,821

 
30,476

 
34,297

 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
Outstanding loan balance
$
48,833

 
$
279,890

 
$
328,723

 
 
 
 
 
 
Credit-impaired loans:
 
 
 
 
 
Carrying value
3,182

 
26,330

 
29,512

Contractual principal and interest
3,932

 
38,566

 
42,498



    





Changes in the accretable yield of the credit-impaired loans for the three months ended March 31, 2014 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
$
698

 
$
3,182

 
$
10,389

 
$
26,330

 
$
11,087

 
$
29,512

Additions
—

 
—

 
—

 
27

 
—

 
27

Accretion
(59
)
 
59

 
(812
)
 
812

 
(871
)
 
871

Net reclassifications to accretable yield from
 
 
 
 
 
 
 
 
 
 
 
   non-accretable yield
—

 
—

 
(153
)
 
—

 
(153
)
 
—

Payments received, net
—

 
(139
)
 
—

 
(7,183
)
 
—

 
(7,322
)
Disposals
(2
)
 
—

 
(220
)
 
—

 
(222
)
 
—

Balance at the end of period
$
637

 
$
3,102

 
$
9,204

 
$
19,986

 
$
9,841

 
$
23,088



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.