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Loans
 9 Months Ended
Sep. 30, 2014
Loans Receivable, Net [Abstract]  
Loans
Loans

The following summarizes the Company’s major classifications for loans (in thousands):
 
September 30, 2014
 
December 31, 2013
Residential real estate
$
1,274,062

 
$
1,204,450

Home equity – junior liens
146,965

 
146,090

Commercial and industrial
130,462

 
148,302

Commercial real estate
1,034,593

 
1,057,048

Consumer
41,042

 
46,402

DDA overdrafts
3,618

 
3,905

Gross loans
2,630,742

 
2,606,197

Allowance for loan losses
(20,487
)
 
(20,575
)
Net loans
$
2,610,255

 
$
2,585,622



Construction loans of $22.4 million and $17.3 million are included within residential real estate loans at September 30, 2014 and December 31, 2013, respectively.  Construction loans of $24.9 million and $24.0 million are included within commercial real estate loans at September 30, 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, Inc. ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions (in thousands):
 
Virginia
 
 
 
 
 
Savings
 
Community
 
Total
September 30, 2014
 
 
 
 
 
Outstanding loan balance
$
42,039

 
$
238,245

 
$
280,284

 
 
 
 
 
 
Credit-impaired loans:
 
 
 
 
 
Carrying value
2,987

 
15,518

 
18,505

Contractual principal and interest
3,481

 
24,147

 
27,628

 
 
 
 
 
 
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 nine months ended September 30, 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

Accretion
(213
)
 
213

 
(1,931
)
 
2,130

 
(2,144
)
 
2,343

Net reclassifications to accretable yield from
 
 
 
 
 
 
 
 
 
 
 
   non-accretable yield
149

 
—

 
3,205

 
—

 
3,354

 
—

Payments received, net
—

 
(408
)
 
—

 
(12,942
)
 
—

 
(13,350
)
Disposals
(146
)
 
—

 
(1,583
)
 
—

 
(1,729
)
 
—

Balance at the end of period
$
488

 
$
2,987

 
$
10,080

 
$
15,518

 
$
10,568

 
$
18,505



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.