Note 6. Loans

The Bank reports its loan portfolio based on the primary collateral of the loan. It further classifies these loans by the primary purpose, either consumer or commercial. The Bank’s mortgage loans include long-term loans to individuals and businesses secured by mortgages on the borrower’s real property. Construction loans are made to finance the purchase of land and the construction of residential and commercial buildings thereon, and are secured by mortgages on real estate. Commercial loans are made to businesses of various sizes for a variety of purposes including construction, property, plant and equipment, and working capital. Commercial loans also include loans to government municipalities. Commercial lending is concentrated in the Bank’s primary market, but also includes purchased loan participations. Consumer loans are comprised of installment, home equity and unsecured personal lines of credit.

A summary of loans outstanding, by primary collateral, at the end of the reporting periods is as follows:


						Change
(Dollars in thousands)	March 31, 2014			December 31, 2013		Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	103,107	$	103,573	$	(466)	(0.4)
Consumer junior liens and lines of credit		34,606		34,636		(30)	(0.1)
Total consumer		137,713		138,209		(496)	(0.4)

Commercial first lien		62,002		58,466		3,536	6.0
Commercial junior liens and lines of credit		5,338		5,939		(601)	(10.1)
Total commercial		67,340		64,405		2,935	4.6
Total residential real estate 1-4 family		205,053		202,614		2,439	1.2

Residential real estate - construction
Consumer		3,188		3,960		(772)	(19.5)
Commercial		8,565		8,559		6	0.1
Total residential real estate construction		11,753		12,519		(766)	(6.1)

Commercial real estate		322,450		329,373		(6,923)	(2.1)
Commercial		178,986		170,327		8,659	5.1
Total commercial		501,436		499,700		1,736	0.3

Consumer		7,816		8,580		(764)	(8.9)
		726,058		723,413		2,645	0.4
Less: Allowance for loan losses		(9,745)		(9,702)		(43)	(0.4)
Net Loans	$	716,313	$	713,711	$	2,602	0.4

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	446	$	372
Unamortized discount on purchased loans	$	(74)	$	(92)

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	582,983	$	607,524
Federal Reserve Bank		64,669		45,809
	$	647,652	$	653,333