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 class, at the end of the reporting periods is as follows:


						Change
(Dollars in thousands)	June 30, 2016		December 31, 2015			Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	101,113	$	103,698	$	(2,585)	(2.5)
Commercial first lien		62,424		57,780		4,644	8.0
Total first liens		163,537		161,478		2,059	1.3

Consumer junior liens and lines of credit		46,106		44,996		1,110	2.5
Commercial junior liens and lines of credit		5,908		5,917		(9)	(0.2)
Total junior liens and lines of credit		52,014		50,913		1,101	2.2
Total residential real estate 1-4 family		215,551		212,391		3,160	1.5

Residential real estate - construction
Consumer		1,067		545		522	95.8
Commercial		7,253		7,343		(90)	(1.2)
Total residential real estate construction		8,320		7,888		432	5.5

Commercial real estate		371,786		340,695		31,091	9.1
Commercial		226,307		215,942		10,365	4.8
Total commercial		598,093		556,637		41,456	7.4

Consumer		4,692		5,100		(408)	(8.0)
		826,656		782,016		44,640	5.7
Less: Allowance for loan losses		(10,318)		(10,086)		(232)	2.3
Net Loans	$	816,338	$	771,930	$	44,408	5.8

Included in the loan balances are the following:
Net unamortized deferred loan fees	$	225	$	436

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	583,567	$	643,449
Federal Reserve Bank		42,060		45,111
	$	625,627	$	688,560