Note 5. 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:



(Dollars in thousands)	September 30, 2016		December 31, 2015
Residential Real Estate 1-4 Family
Consumer first liens	$	99,571	$	103,698
Commercial first lien		63,515		57,780
Total first liens		163,086		161,478

Consumer junior liens and lines of credit		46,688		44,996
Commercial junior liens and lines of credit		5,837		5,917
Total junior liens and lines of credit		52,525		50,913
Total residential real estate 1-4 family		215,611		212,391

Residential real estate - construction
Consumer		1,589		545
Commercial		7,067		7,343
Total residential real estate construction		8,656		7,888

Commercial real estate		375,316		340,695
Commercial		254,274		215,942
Total commercial		629,590		556,637

Consumer		4,719		5,100
		858,576		782,016
Less: Allowance for loan losses		(10,685)		(10,086)
Net Loans	$	847,891	$	771,930

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	149	$	436

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	692,043	$	643,449
Federal Reserve Bank		41,806		45,111
	$	733,849	$	688,560