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 residential real estate loans include long-term loans to individuals and businesses secured by mortgages on the borrower’s real property and include home equity loans. 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 real estate loans include construction, owner and non-owner occupied properties and farm real estate. Commercial loans are made to businesses of various sizes for a variety of purposes including property, plant and equipment, working capital and 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 loans 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)	September 30, 2014		December 31, 2013			Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	104,823	$	103,573	$	1,250	1.2
Consumer junior liens and lines of credit		37,454		34,636		2,818	8.1
Total consumer		142,277		138,209		4,068	2.9

Commercial first lien		58,320		58,466		(146)	(0.2)
Commercial junior liens and lines of credit		5,664		5,939		(275)	(4.6)
Total commercial		63,984		64,405		(421)	(0.7)
Total residential real estate 1-4 family		206,261		202,614		3,647	1.8

Residential real estate - construction
Consumer		1,286		3,960		(2,674)	(67.5)
Commercial		8,854		8,559		295	3.4
Total residential real estate construction		10,140		12,519		(2,379)	(19.0)

Commercial real estate		323,570		329,373		(5,803)	(1.8)
Commercial		184,049		170,327		13,722	8.1
Total commercial		507,619		499,700		7,919	1.6

Consumer		6,625		8,580		(1,955)	(22.8)
		730,645		723,413		7,232	1.0
Less: Allowance for loan losses		(8,935)		(9,702)		767	(7.9)
Net Loans	$	721,710	$	713,711	$	7,999	1.1

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	511	$	372
Unamortized discount on purchased loans	$	(25)	$	(92)

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	602,666	$	607,524
Federal Reserve Bank		57,143		45,809
	$	659,809	$	653,333