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, 2015		December 31, 2014			Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	104,881	$	105,014	$	(133)	(0.1)
Commercial first lien		58,083		56,300		1,783	3.2
Total first liens		162,964		161,314		1,650	1.0

Consumer junior liens and lines of credit		43,024		38,132		4,892	12.8
Commercial junior liens and lines of credit		6,014		5,663		351	6.2
Total junior liens and lines of credit		49,038		43,795		5,243	12.0
Total residential real estate 1-4 family		212,002		205,109		6,893	3.4

Residential real estate - construction
Consumer		890		1,627		(737)	(45.3)
Commercial		7,155		8,088		(933)	(11.5)
Total residential real estate construction		8,045		9,715		(1,670)	(17.2)

Commercial real estate		337,597		326,482		11,115	3.4
Commercial		207,757		179,071		28,686	16.0
Total commercial		545,354		505,553		39,801	7.9

Consumer		5,274		6,154		(880)	(14.3)
		770,675		726,531		44,144	6.1
Less: Allowance for loan losses		(9,873)		(9,111)		(762)	(8.4)
Net Loans	$	760,802	$	717,420	$	43,382	6.0

Included in the loan balances are the following:
Net unamortized deferred loan fees (costs)	$	318	$	(76)

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	641,496	$	602,633
Federal Reserve Bank		48,554		56,367
	$	690,050	$	659,000

At September 30, 2015, the Bank had $61 thousand of residential properties in the process of foreclosure compared to $763 thousand at the end of 2014.