Loans

The composition of Net loans at December 31, was as follows:



	2016			2015
	(Dollars in thousands)
Residential real estate	$	172,727		$	165,396
Construction real estate	34,189			42,889
Commercial real estate	249,063			230,442
Commercial	41,999			21,397
Consumer	3,962			3,963
Municipal	31,350			36,419
Gross loans	533,290			500,506
Allowance for loan losses	(5,247		)	(5,201		)
Net deferred loan costs	649			515
Net loans	$	528,692		$	495,820

The loans purchased in the 2011 Branch Acquisition were initially recorded at $32.9 million, the estimated fair value at the time of purchase, which contained an accretable loan premium component of $545 thousand and a nonaccretable credit risk component of $318 thousand. The accretable component was amortizable as an adjustment to the related loan yield over the average life of the loan and the nonaccretable component represented probable loss due to credit risk, which was reviewed by management periodically and subject to adjustment as deemed necessary. There were no acquired loans at December 31, 2016 and December 31, 2015, as the remaining residential and commercial real estate acquired loan portfolios were transferred to the Bank's existing loan portfolios during 2015. Prior to that transfer, changes in the accretable and nonaccretable components of the fair value of the acquired loans were charged to Interest and fees on loans on the Company's consolidated statements of income for the applicable periods.

The following table summarizes activity in the accretable loan premium component for the acquired loan portfolio:



	For The Years Ended December 31,
	2016		2015			2014
	(Dollars in thousands)
Balance at beginning of year	$	—	$	292		$	374
Loan premium amortization	—		(72		)	(80		)
Changes in expected cash flows due to paydowns	—		(7		)	2
Adjustment to transfer acquired loans into the Bank's existing loan portfolio	—		(213		)	(4		)
Balance at end of year	$	—	$	—		$	292

The following table summarizes activity in the nonaccretable credit risk component for the acquired loan portfolio:



	For The Years Ended December 31,
	2016		2015			2014
	(Dollars in thousands)
Balance at beginning of year	$	—	$	193		$	296
Loss recognized on acquired residential loan	—		—			(24		)
Adjustment to transfer acquired loans into the Bank's existing loan portfolio	—		(193		)	(79		)
Balance at end of year	$	—	$	—		$	193

Residential real estate loans aggregating $17.2 million at December 31, 2015 were pledged as collateral on deposits of municipalities. There were no loans pledged as collateral on deposits of municipalities at December 31, 2016. Qualifying residential first mortgage loans and certain commercial real estate loans held by Union may also be pledged as collateral for borrowings from the FHLB under a blanket lien.

A summary of current, past due and nonaccrual loans as of the balance sheet dates follows:



December 31, 2016	Current		30-59 Days		60-89 Days		90 Days and over and accruing		Nonaccrual		Total
	(Dollars in thousands)
Residential real estate	$	168,125	$	1,661	$	472	$	672	$	1,797	$	172,727
Construction real estate	34,148		17		—		—		24		34,189
Commercial real estate	245,402		1,642		153		157		1,709		249,063
Commercial	41,920		12		42		10		15		41,999
Consumer	3,946		12		3		1		—		3,962
Municipal	31,350		—		—		—		—		31,350
Total	$	524,891	$	3,344	$	670	$	840	$	3,545	$	533,290



December 31, 2015	Current		30-59 Days		60-89 Days		90 Days and over and accruing		Nonaccrual		Total
	(Dollars in thousands)
Residential real estate	$	159,895	$	2,034	$	1,195	$	368	$	1,904	$	165,396
Construction real estate	42,616		7		204		34		28		42,889
Commercial real estate	228,513		667		641		111		510		230,442
Commercial	20,977		—		20		321		79		21,397
Consumer	3,950		10		1		2		—		3,963
Municipal	36,419		—		—		—		—		36,419
Total	$	492,370	$	2,718	$	2,061	$	836	$	2,521	$	500,506

There was one residential real estate loan totaling $50 thousand in process of foreclosure at December 31, 2016. Aggregate interest on nonaccrual loans not recognized was $1.3 million for the year ended December 31, 2016, $1.2 million for the year ended December 31, 2015 and $1.1 million for the year ended December 31, 2014.