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, 2013			December 31, 2012		Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	97,331	$	93,790	$	3,541	3.8
Consumer junior liens and lines of credit		34,152		35,494		(1,342)	(3.8)
Total consumer		131,483		129,284		2,199	1.7

Commercial first lien		56,569		60,809		(4,240)	(7.0)
Commercial junior liens and lines of credit		6,506		6,794		(288)	(4.2)
Total		63,075		67,603		(4,528)	(6.7)
Total residential real estate 1-4 family		194,558		196,887		(2,329)	(1.2)

Residential real estate - construction
Consumer purpose		3,856		3,255		601	18.5
Commercial purpose		10,476		12,177		(1,701)	(14.0)
Total residential real estate construction		14,332		15,432		(1,100)	(7.1)

Commercial, industrial and agricultural real estate		364,439		363,874		565	0.2
Commercial, industrial and agricultural		162,808		166,734		(3,926)	(2.4)
Consumer		10,027		10,652		(625)	(5.9)
		746,164		753,579		(7,415)	(1.0)
Less: Allowance for loan losses		(10,943)		(10,379)		(564)	5.4
Net Loans	$	735,221	$	743,200	$	(7,979)	(1.1)

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	351	$	456
Unamortized discount on purchased loans	$	(123)	$	(129)

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	588,349	$	657,684
Federal Reserve Bank		109,854		112,613
	$	698,203	$	770,297