Loans

The composition of Net loans at December 31, was as follows:



	2013			2012
	(Dollars in thousands)
Residential real estate	$	159,441		$	154,938
Construction real estate	30,898			36,018
Commercial real estate	210,718			197,240
Commercial	20,569			21,463
Consumer	5,396			6,065
Municipal	34,091			28,421
Gross loans	461,113			444,145
Allowance for loan losses	(4,647		)	(4,657		)
Net deferred loan costs	170			139
Net loans	$	456,636		$	439,627

The loans purchased in the May 2011 acquisition of three New Hampshire branches were initially recorded at $32.9 million, the estimated fair value at the time of purchase. The estimated fair value contained both accretable and nonaccretable components. The accretable component is amortized as an adjustment to the related loan yield over the average life of the loan. The nonaccretable component represents probable loss due to credit risk and is reviewed by management periodically and adjusted as deemed necessary. At the acquisition date, the fair value of the loans acquired resulted in an accretable loan premium component of $545 thousand, less a nonaccretable credit risk component of $318 thousand. There was no change in the nonaccretable credit risk component balance during the year ended December 31, 2013, and a decrease of $22 thousand during 2012 due to loss recognized on one acquired commercial loan. The resulting balance of the nonaccretable credit risk component is $296 thousand at December 31, 2013. The net carrying amounts of the acquired loans were $17.0 million and $22.9 million at December 31, 2013 and 2012, respectively, and are included in the loan balances above.

The following table summarizes activity in the accretable loan premium component for the acquired loan portfolio:



	For The Years Ended December 31,
	2013			2012
	(Dollars in thousands)
Balance at beginning of year	$	454		$	491
Loan premium amortization	(80		)	(90		)
Changes in expected cash flows due to paydowns	—			53
Balance at end of year	$	374		$	454

Residential real estate loans aggregating $22.7 million and $11.4 million at December 31, 2013 and 2012, respectively, were pledged as collateral on deposits of municipalities. Qualified first mortgages held by Union may also be pledged as collateral for borrowings from the FHLB of Boston under a blanket lien.

A summary of current, past due and nonaccrual loans as of the balance sheet dates follows:



December 31, 2013	Current		30-59 Days		60-89 Days		90 Days and over and accruing		Nonaccrual		Total
	(Dollars in thousands)
Residential real estate	$	153,469	$	3,371	$	1,247	$	262	$	1,092	$	159,441
Construction real estate	30,513		300		59		—		26		30,898
Commercial real estate	207,429		1,117		1,938		—		234		210,718
Commercial	20,326		195		—		—		48		20,569
Consumer	5,295		66		—		1		34		5,396
Municipal	34,091		—		—		—		—		34,091
Total	$	451,123	$	5,049	$	3,244	$	263	$	1,434	$	461,113



December 31, 2012	Current		30-59 Days		60-89 Days		90 Days and over and accruing		Nonaccrual		Total
	(Dollars in thousands)
Residential real estate	$	148,479	$	2,573	$	1,274	$	296	$	2,316	$	154,938
Construction real estate	35,944		24		6		—		44		36,018
Commercial real estate	193,079		2,943		812		—		406		197,240
Commercial	20,541		811		39		—		72		21,463
Consumer	6,012		31		10		11		1		6,065
Municipal	28,421		—		—		—		—		28,421
Total	$	432,476	$	6,382	$	2,141	$	307	$	2,839	$	444,145

Aggregate interest on nonaccrual loans not recognized was $1.1 million and $1.0 million for the years ended December 31, 2013 and 2012, respectively.