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Loans
 9 Months Ended
Sep. 30, 2016
Loans Receivable, Net [Abstract]  
Loans
Loans

The following summarizes the Company’s major classifications for loans (in thousands):
 
September 30, 2016
December 31, 2015
Residential real estate
$
1,445,242

$
1,383,133

Home equity
141,616

147,036

Commercial and industrial
176,387

165,340

Commercial real estate
1,158,088

1,127,581

Consumer
33,614

36,083

DDA overdrafts
2,965

3,361

Gross loans
2,957,912

2,862,534

Allowance for loan losses
(19,550
)
(19,251
)
Net loans
$
2,938,362

$
2,843,283



Construction loans of $12.3 million and $13.1 million are included within residential real estate loans at September 30, 2016 and December 31, 2015, respectively.  Construction loans of $7.3 million and $12.6 million are included within commercial real estate loans at September 30, 2016 and December 31, 2015, 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 residential and commercial real estate lending, including specific risks related to construction lending.  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"), Community Financial Corporation ("Community") and American Founders Bank ("AFB") acquisitions (in thousands):
 
Virginia
 
 
 
 
Savings
Community
AFB
Total
September 30, 2016
 
 
 

Outstanding loan balance
$
25,520

$
154,832

$
95,457

$
275,809

 
 
 
 
 
Credit-impaired loans:
 
 
 
 
Carrying value
1,707

9,712

—

11,419

Contractual principal and interest
1,908

12,091

—

13,999

 
 
 
 
 
December 31, 2015
 
 
 
 
Outstanding loan balance
$
28,914

$
181,545

$
112,862

$
323,321

 
 
 
 
 
Credit-impaired loans:
 
 
 
 
Carrying value
1,707

12,899

—

14,606

Contractual principal and interest
1,965

16,362

—

18,327



    





    
Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2016 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
$
374

$
1,707

$
6,266

$
12,899

$
6,640

$
14,606

Accretion
(114
)
114

(744
)
744

(858
)
858

Net reclassifications to accretable yield from
 
 
 
 
 
 
   non-accretable yield
51

—

(38
)
—

13

—

Payments received, net
—

(114
)
—

(3,197
)
—

(3,311
)
Disposals
—

—

(1
)
(734
)
(1
)
(734
)
Balance at the end of period
$
311

$
1,707

$
5,483

$
9,712

$
5,794

$
11,419



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.