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Loans
 9 Months Ended
Sep. 30, 2015
Loans Receivable, Net [Abstract]  
Loans
Loans

The following summarizes the Company’s major classifications for loans (in thousands):
 
September 30, 2015
December 31, 2014
Residential real estate
$
1,358,083

$
1,294,576

Home equity – junior liens
144,748

145,604

Commercial and industrial
124,495

140,548

Commercial real estate
1,029,103

1,028,831

Consumer
36,751

39,705

DDA overdrafts
3,258

2,802

Gross loans
2,696,438

2,652,066

Allowance for loan losses
(20,941
)
(20,150
)
Net loans
$
2,675,497

$
2,631,916



Construction loans of $14.8 million and $23.0 million are included within residential real estate loans at September 30, 2015 and December 31, 2014, respectively.  Construction loans of $12.0 million and $28.7 million are included within commercial real estate loans at September 30, 2015 and December 31, 2014, 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, 2015
 
 
 
Outstanding loan balance
$
31,143

$
190,788

$
221,931

 
 
 
 
Credit-impaired loans:
 
 
 
Carrying value
1,861

13,400

15,261

Contractual principal and interest
2,149

17,834

19,983

 
 
 
 
December 31, 2014
 
 
 
Outstanding loan balance
$
38,345

$
219,923

$
258,268

 
 
 
 
Credit-impaired loans:
 
 
 
Carrying value
1,964

15,365

17,329

Contractual principal and interest
2,407

23,277

25,684



    





    
Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2015 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
$
428

$
1,964

 
$
9,906

$
15,365

 
$
10,334

$
17,329

Accretion
(147
)
147

 
(1,915
)
1,915

 
(2,062
)
2,062

Net reclassifications to accretable yield from
 
 
 
 
 
 
 
 
   non-accretable yield
—

—

 
937

—

 
937

—

Payments received, net
—

(250
)
 
—

(1,861
)
 
—

(2,111
)
Disposals
(38
)
—

 
(1,187
)
(2,019
)
 
(1,225
)
(2,019
)
Balance at the end of period
$
243

$
1,861

 
$
7,741

$
13,400

 
$
7,984

$
15,261



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.